Bill offers tax relief for academic materials

College students will soon be able to claim textbooks and other essential course materials as a tax credit under legislation signed into law in February.
The American Opportunity tax credit allows students up to $2,500 back for tuition and material out-of-pocket expenses for the tax years of 2009 and 2010. This credit expands the older Hope credit, which allowed students to file only tuition costs for tax returns.
“Where the tax credit really can help make a huge difference is filling in … unmet need,” said Richard Hershman, director of government relations at the National Association of College Stores, a professional trade association representing the collegiate retailing industry. “It’s helping address the difference between your cost and what financial aid grant money you’re receiving. Even for students who aren’t receiving any grant aid, this is an aid for them.”
According to the Internal Revenue Service (IRS) website, students or families whose modified adjusted gross income is under $80,000, or jointly $160,000, qualify for the full credit. Those with gross incomes of $90,000, or jointly $180,000, can receive a partial credit. Students with higher incomes cannot take advantage of the program.
“There’s also another tax benefit around just tuition and fees,” said Seamus Harreys, dean of student financial services. “Typically this benefit will be … better than that [other] benefit, but it depends upon what you qualify for and exactly how your income and assets [are] taxed.”
The tax credit is 40 percent refundable, allowing students to file for the tax credit even if they did not work, and receive up to a $1,000 refund for $2,500 worth of textbooks claimed, Hershman said.
Despite the tax credit’s benefits for students, some students said they do not make use of it, and others said they had never heard of it.
“Taxes are kind of complicated,” Hershman said. “The federal tax incentives … that exist for education frequently go underutilized, meaning that even though you may qualify, a lot of students and families haven’t applied for their tax refunds. But I think the important message is that students need to be aware of the credit.”
While they may not always succeed, Harreys said the school tries to keep families informed of tax credit opportunities.
“We have always made sure that we have made students and families aware, [since] almost eight years ago … when the Hope and Lifetime Learning tax credits came out,” said Harreys.
Students said they would definitely make use of the tax credit now that they know about it.
 Freshman industrial engineering major Dave Hoch said he would use the credit to get the money back.
While most said they would claim textbooks under the credit, some students listed other materials as well.
Sophomore digital art major Mike Godlewski said he would claim Adobe Suite and his art supplies.
Harreys and Hershman said they thought that the government would provide more opportunities for students to save money in paying for college.
“There’s a commitment from Congress and from the Obama administration to … make the credit even better,” Hershman said. “I think there’s a strong commitment to doing more for students, both through Pell grants and other financial aid as well, like tax credits and deductions.”
“The federal government will always need to balance the tax credits versus direct grant aid and I think there’s always a trade-off about which one that they’re doing,” Harreys said. “I think is what they’ve tried to do is given the economic circumstances, is [to] infuse money into both programs.”
Hershman said he thinks the most important thing is for students to be aware of the opportunities to save available to them. He said that though few students take advantage of the tax credits offered, he hopes as many as possible will utilize it.
“Particularly with the American Opportunity tax credit … this is really a good deal, no matter how you slice it,” Hershman said. “[Students] really should look at the tax credit and the way to get money back.”