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When you’re looking at education expenses, sticker shock sets in quickly. The price for yearly tuition alone can range from nearly $8,000 at public four-year colleges for in-state students to an eye-popping $35,000 or more at private four-year institutions, according to the College Board. And those amounts don’t include the cost of room and board as well as other expenses.
The good news is that the tax laws offer a number of opportunities to minimize your out-of-pocket education costs, if you know how to make the most of them. The California Society of CPAs (www.calcpa.org) provides these valuable tips.
Late last year, Congress voted to extend the American Opportunity Credit (AOC) for two years. Taxpayers can use the AOC to reduce their tax burden, Since 2009, it’s been possible to qualify for this credit for as much as $2,500 per student per year for qualified tuition and expenses during the first four years of post-secondary education. The credit covers not only school fees, but also course materials, which might include books, supplies and equipment.
There are income limits on who can qualify for the credit, so check with your CPA to learn whether it applies in your situation. Keep in mind, too, that you can’t claim the credit unless you are enrolled at least half-time.
It’s clear that there are a number of ways to lower the high costs of higher education. If you want to take advantage of these opportunities, be sure to turn to your local CPA for advice. He or she can help you address all your financial concerns.
Copyright 2011 American Institute of Certified Public Accountants.