Do I Have To File a Tax Return?

Yes, you must file a federal income tax return if you are a U.S. citizen. However, there are certain instances where a taxpayer does not have to file a return based on three factors:

• Gross Income
• Filing Status
• Age

You must file a return if your gross income is at least the amount shown for your age and filing status.

Back to School = Big Rewards

Higher education expenses can be a huge benefit come tax time. There are several options available.

American Opportunity Credit tax years 2009 through 2010

• The maximum credit is $2,500 (same as 2009) per student (100% of the first $2,000 of expenses, 25% of the next $2,000 of expenses)
• The credit can be claimed for first four years of post-secondary education.
• Credit can reduce your tax liability dollar for dollar (Form 1040 line 49) and provide up to $1,000 additional refund (Form 1040 line 66).

Higher credit for college students

The new American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010. Under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify over the next two years for a tax credit, the American Opportunity Credit, to pay for college expenses. Include Form 8863 with your tax return.

American Opportunity Credit (new); tax years 2009 and 2010

• includes required course materials to the list of qualifying expenses
• allows the credit to be claimed for four post-secondary education years
• Maximum credit for each student is $2,500 (100% of the first $2,000 of expenses, 25% of the next $2,000 of expenses)
• Credit can reduce your tax liability dollar for dollar (Form 1040 line 49) and provide up to $1,000 additional refund (Form 1040 line 66).
• The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return.

Hope Credit; 2008 tax years and earlier

• only includes tuition and fees you are required to pay to the institution as a condition of enrollment or attendance - typically does not include books
• available for only the first two years of post-secondary education - usually the freshmen and sophomore years
• Maximum credit for each student is $1,800 (100% of the first $1,200 of expenses, 50% of the next $1,200 of expenses)
• Credit can only reduce your tax liability dollar for dollar
• The full credit is available to individuals whose modified adjusted gross income is $48,000 or less, or $96,000 or less for married couples filing a joint return.