For all the laments about the rising costs of college, there are plenty of people who pay low or no tuition. For some, perhaps most, this is need-based. For others, including many members of the middle class or beyond, this is merit based.
Why am I mentioning this? Because I have mentioned the American Opportunity Tax Credit to many people and not one had heard of it. There have long been tax credits for tuition and fees. And for most, tuition and fees ate up--and continue to eat up--the credit, In 2009-10 (and, I think extended in the recent lame duck congressional session), TEXTBOOKS are included in the $2500/year potential credit. TEXTBOOKS were never included before.
Because both of my children made use of their National Merit Scholarships, they pay no tuition or fees. THANK YOU CHILDREN FOR YOUR CHOICES. Like many, I have been appalled by textbook prices. Even with all my ingenuity and frugal bloodhound skills, I have seldom managed to save very much.
As of 2009, I can relax. The French text is $120 plus a $90 computer pad fee...well, tant pis.
But many don't know about this. My daughter wanted to lend her books to her pal last semester. The books were keepers and I didn't want them to go astray. Miss Em's friend had very high SATs and received free tuition at the same college. I told Miss Em to tell the friend to tell her parents that they would be eligible for the credit. Via the grapevine--from a doctor--a thank you.
Miss Em's hometown friend who received both need- and merit-based aid was lamenting the fact that she couldn't accompany us to Goodwill for a fun shop because she had to save for her textbooks. I told her to tell her mother about the credit. I hope she does.
Many students in Louisiana (TOPs program) and Georgia (HOPE credit) pay no tuition. Other states give free or reduced tuition to students--like my daughter's friend above--who have high SATs or ACTs (over 1400 seems to be required; over 1500 will be better. This is just for the first two parts. For the ACT, I think over 30 is the requirement. It may be higher.)
Even students at private schools may receive tuition scholarships. Textbooks, often not covered, are estimated to cost around $500/semester. I think this is a low estimate, since textbooks prices--like prescription drugs--are both required and prescribed by people often clueless about the cost to the users. Much has been written about the constant, unnecessary revisions in textbooks, which render used books unusable.
OK. Enough of that rant. For those who pay no or low tuition--and this perhaps applies to community college students in some areas--the American Opportunity credit can BE USED FOR TEXTBOOKS.
I hope Miss Em's pal's mom files an amended return for 2009 and 2010.
If you know anyone in a relevant situation, please pass on this info!
P.S. I am NOT A TAX EXPERT. LOOK INTO THIS YOURSELF. PLEASE.