When it comes to paying for college, everybody needs all the help they can get.  So this week let’s talk about some tips to help with financial aid and tax aid as well.

Tax Aid Tip

The American Opportunity Tax Credit has been extended for tax years 2011—2012, and is available for taxpayers with a modified adjusted gross income of up to $180,000 (for married filing jointly), and $90,000 for single tax filers. The amount of the credit is based on 100% of the first $2,000 of qualified college tuition and fees paid, plus 25% of the next $2,000 in tuition and fees, for a credit of up to $2,500 per child. The credit phases out between $160,000—$180,000 of MAGI for married taxpayers filling jointly, and between $80,000—$90,000 of MAGI for single taxpayers. This credit can be used to reduce the taxpayers federal tax dollar‐for‐dollar, and is refundable up to $1,000 for some taxpayers.

Financial Aid Tip

1) If you are unemployed, you may be considered a “dislocated worker” for financial aid purposes, and that may help increase your child’s need‐based financial aid eligibility under the federal financial aid rules.

2) Some colleges require both the FAFSA (Free Application for Federal Student Aid) and the CSS Profile when students apply for financial aid. Both applications can be completed online.

3) Many tax deductions, credits and favorable tax rates have been extended for through 2012. Check with your tax preparer to make sure that you are making the most of all of the tax changes.

 

Tags: ,