New tax credits to assist eligible students

New federal tax credits have been expanded for 2008 and will allow eligible students in Monroe and other Indiana counties to offset their qualified tuition rates.

These tax benefits will increase two existing higher education credits: the Hope Credit and the Lifetime Learning Credit.

“The tax benefits from the Hope and Lifetime Learning credits are being increased for many counties in Indiana, including both Indiana University and Ivy Tech State College here in Monroe County,” Internal Revenue Service spokeswoman Jodie Reynolds said.

“These new provisions make it possible for any student, even people from out of state, to be eligible to apply for these tax credits.”

The Hope Credit expanded from $2,400 to $3,600 in education expenses that can be deducted from the tuition of freshmen and sophomores whose parents’ modified gross income in 2008 was less than $58,000.

The Lifetime Learning Credit has been expanded to reduce annual income tax up to $4,000 in tuition and housing fees for students taking at least six credits in graduate or undergraduate programs, according to the IRS Web site.

This includes any student taking classes in these federally designated “Midwestern Disaster Areas,” which includes students in Monroe County.

Sens. Richard Lugar and Evan Bayh proposed the Heartland Disaster Tax Relief Act of 2008, which originally encompassed the Hope and Lifetime Learning credits, for students and families affected by the flood damages during summer 2008.

All of these “Midwestern Disaster Areas” were allocated a certain amount of funds last summer. However, the credits were expanded last fall to give more tax credits to
students and families pursuing higher education degrees at certain Midwest institutions.

“Basically, these pre-existing credits have simply been expanded to give more
students in the Midwest more money to offset higher education costs,” Reynolds said.
 “With the rising costs of tuition, these new credits could help many students who require financial assistance.”

In addition to increasing the amount of money that can be deducted, these recent tax credits have maximized the different types of items that can be covered.

The exempted costs now include University and off-campus housing, meals and course-mandatory books and supplies paid for during the 2008 school year, according to the Office of the Bursar Web site. Undergraduates could acquire up to $3,818 in off-campus housing deductions and graduate students can acquire a maximum of $5,652.

For further information and eligibility questions, visit IU’s Office of the Bursar Web site at http://bursar.indiana.edu/taxcredit.php.

– By Ben Fearnow