Sen. Carper Urges Delaware Students and Families to Take Advantage of Tax Credits to Help Pay for Higher Education

DOVER, Del. – Sen. Tom Carper (D-Del.) and  Delaware Technical & Community College Officials joined together to highlight college tuition tax credits that could save students in Delaware up to $2500 a year. The American Opportunity Tax Credit can provide a significant amount of money to help students and their families meet the many costs of higher education, but a recent Treasury report showed that nearly 53 percent of Delaware students aren’t take advantage of it. 

First created as part of the American Recovery and Reinvestment Act, the American Opportunity Tax Credit was extended for an additional two years at the end of December as part of the Tax Relief and Unemployment Insurance Reauthorization and Job Creation Act of 2010. The American Opportunity Tax Credit is a refundable tax credit for undergraduate college education expenses. This credit provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses. The tax credit is scheduled to have a limited life span: it will be available only for the years 2009 through 2012. 

Sen. Carper, Dan Simpson, Campus Director of the Del Tech Terry Campus, and Stephanie Smith, Vice President for Academic Affairs, encouraged students to take advantage of the tax credit when filing their tax returns between now and April 15.

“We’re blessed in Delaware to have many excellent institutions of higher learning, including Del Tech,” said Sen. Carper. “These colleges and universities provide a valuable service to our students and our communities, training the next generation of highly skilled workers that help grow our economy.  Obtaining this education isn’t easy – it requires hard work and financial resources – and in this economy it’s often challenging for students and their families to find the money to pay for higher education. That’s why I want to make sure that every Delawarean knows about the American Opportunity Tax Credit. This is a great resource that can provide up to $2500 for educational expenses – money that can make a real difference for students looking to further their education. I hope every student that’s eligible will take advantage of this tax credit.”  

At the event, Sen. Carper and the college officials also discussed the Obama Administration’s focus on out-educating, out-innovating, and out-competing the rest of the world. The President has set out a goal for the United States to lead the world in college completion rates by 2020, and community colleges will be integral in meeting that goal. The Student Aid and Fiscal Responsibility Act (SAFRA) provides $2 billion over four years to community colleges to provide state-of-the-art education and training programs to assist out of work Americans get back into the job market with more marketable skills. The funds also enable community colleges to partner with universities, government and businesses to develop career pathways so that college graduates are prepared for the workforce.

Details of the American Opportunity Tax Credit:

The credit is worth up to $2,500 on the first $4,000 of qualifying educational expenses, which include course materials as well as tuition. The American Opportunity credit applies to all four years of undergraduate college education. The tax credit is scheduled to have a limited life span: it will be available only for the years 2009 through 2012, unless Congress decides to extend the credit to other years.

The credit is gradually reduced (or “phased out”) for income from $80,000 to $90,000 (or $160,000 to $180,000 for joint filers). The tax credit is not available for people with incomes above the phase out range. Opportunity tax credit is 100 percent of the first $2,000 in qualifying education expenses, plus 25 percent of the next $2,000 in qualifying expenses.

Up to 40 percent of the American Opportunity credit is refundable. That means up to $1,000 of the American Opportunity credit can be refunded an individual, even if their tax liability is zero. This makes the American Opportunity credit potentially more valuable than the Lifetime Learning credit, which is non-refundable. Individuals can claim the American Opportunity Credit for themselves or their dependents if the student is enrolled at least half-time in a college, university or other accredited post-secondary educational institution.