2009 Education Credit Information
Accordingly, the maximum Hope Scholarship Credit allowable under § 25A(b)(1) for taxable years beginning in 2009 is $1,800.
For taxable years beginning in 2009, a taxpayer’s modified adjusted gross income in excess of $50,000 ($100,000 for a joint return) is used to determine the reduction under § 25A(d)(2)(A)(ii) in the amount of the Hope Scholarship and Lifetime Learning Credits otherwise allowable under § 25A(a).
Interest on Education Loans
For taxable years beginning in 2009, the $2,500 maximum deduction for interest paid on qualified education loans under § 221 begins to phase out under § 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $60,000 ($120,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $75,000 or more ($150,000 or more for joint returns).
Revenue Procedure 2008-66.
“American Opportunity” Education Tax Credit. The bill would provide financial assistance for individuals seeking a college education. For 2009 and 2010, the bill would provide taxpayers with a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year. Under this new tax credit, taxpayers will receive a tax credit based on one hundred percent (100%) of the first $2,000 of tuition and related expenses (including books) paid during the taxable year and twenty-five percent (25%) of the next $2,000 of tuition and related expenses paid during the taxable year. Forty percent (40%) of the credit would be refundable. This tax credit will be subject to a phase-out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly). This proposal is estimated to cost $13.907 billion over 10 years.
Offset Education Costs
Education tax credits can help offset the costs of higher education for yourself or a dependent. The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you. Because they are credits rather than deductions, you may be able to subtract them in full, dollar for dollar, from your federal income tax.
The Hope Credit
The credit applies for the first two years of post-secondary education, such as college or vocational school. It does not apply to the third, fourth, or higher years of undergraduate programs, to graduate programs, or to professional-level programs.
It can be worth up to $1,800 ($3,600 if a student in a Midwestern disaster area) per eligible student, per year.
Each student must be enrolled at least half-time for at least one academic period which began during the year.
The Lifetime Learning Credit
The credit applies to undergraduate, graduate and professional degree courses, including instruction to acquire or improve job skills, regardless of the number of years in the program.
If you qualify, your credit equals 20% (40% if a student in a Midwestern disaster area) of the first $10,000 of post-secondary tuition and fees you pay during the year, for a maximum credit of $2,000 ($4,000 if a student in a Midwestern disaster area) per tax return.
You cannot claim both the Hope and Lifetime Learning Credits for the same student in the same year. You also cannot claim either credit if you claim a tuition and fees deduction for the same student in the same year. To qualify for either credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
These credits are phased out for Modified Adjusted Gross Income over $48,000 ($96,000 for married filing jointly) and eliminated completely for Modified Adjusted Gross Income of $58,000 or more ($116,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.
For more information, see Publication 970, Tax Benefits for Education, which can be obtained online at IRS.gov or by calling the IRS at 800-TAX-FORM (800-829-3676).
Information Regarding Carrying Back Your 2008 NOL
By Stacie Clifford Kitts, CPA
How to elect a longer carryback period:
A statement attached to the 2008 tax return is required to make the election to receive a longer than 2 year carryback.
The statement must indicate that the taxpayer is adopting the longer carryback period. As well as indicating the number of years the loss will be carried back. Once a taxpayer makes the election, it can not be revoked. (See the specific language for the election included in Revenue Procedure 2009-19) See below updated Revenue Procedure 2009-26 available May 2009
What if the taxpayer forgets to make the election?
How to file for relief – a late election:
When to file for relief:
Relief MUST be requested within six months of the due date of the 2008 return (including extensions.)
Here is what to do if a carryback was already filed but the election was not made to use the longer carryback provisions.
If a carryback claim was already filed (on an amended return or via an application for tentative refund) but the taxpayer used the 2-year carryback rule instead of the new 3, 4 or 5 year carryback period, the taxpayer should re-file the carryback claim and include the following language at the top of the form:
“Amended NOL Carryback Election Pursuant to Rev. Proc. 2009-19”
What to do if the NOL carryback was waived but now the taxpayer wants to use the 3, 4 or 5 year carryback period.
If the taxpayer waived the carryback period, the waiver may be revoked by filing an amended return or an application for tenative refund and making the proper election. The taxpayer must include the language at the top of the amended return or application for tentative refund:
If the election to use the longer carryback period was timely made then the taxpayer has until the end of the next succeeding year to file form 1045 or form 1139 (whichever is applicable.)
If the election was not timely made, then the application for tentative refund must be filed by within six months of the due date of the return (September 15th for calendar year corporations, October 15th for Individuals; Estates & Trusts – Assume September 15th as that is the last date due for an extended return despite that the regulation provides for an automatic 6-month extension.)
References:
IRC §172(b)(1)(F) & (H)
Rev. Proc. 2009-19
Reg. §301.9100-2
