Changes in the Hope Credit

[kcjenkins]

Education Provisions

The Hope Credit will become the American Opportunity Tax Credit. For 2009-2010 this credit will be enhanced as follows:

It will cover 4 rather than the previous 2 years of college.

The maximum credit has been raised from $1800 to $2500.

40% of the credit will be refundable.

Course materials are now considered qualifying expenses.

The credit will be 100% of the first $2000 and 25% of the next $2000.

Phaseout levels have been raised substantially to $80,000 for single taxpayers ($160,000 for joint).

[Catherine]

Thank you for posting this, KC!

[kcjenkins]

Two other changes that will affect many:

Child Tax Credit The refundable portion of the child tax credit will be increased. Previously after reaching a threshold of $8,500 of earned income the refundable portion was 15% (subject to other limits), now the threshold will be lowered to $3,000.

Earned Income Credit For 2009 and 2010, families with 3 or more children will have a new rate of 45% on the first $12,570 of earned income. The threshold phase-out amount for joint filers increases to $5,000 above the phase-out amounts for other statuses (an increase of $1,880 over past law).