Online Degree Programs

There’s a saying that advancing one’s education pays off sooner or later. Thanks to 2009’s stimulus act, getting a bachelors degree pays before you even graduate. It made it possible to get a tax refund for going to college, and that refund can be thousands of dollars. Included in this are the online college courses so many students are participating in.

This new program was dubbed the American Opportunity Credit. It’s an expansion of what was previously the Hope Credit. If one attended any kind of college this last year, whether it’s brick and mortar or online, one can even apply for it this April. If you need more information about online degree education, look on the internet.

There are several key differences between the Hope and the Opportunity credits. According to the IRS, the Opportunity Credit entitles more students (and their parents) to qualify over the next two years for a tax credit to pay for college expenses, including many with higher incomes and those who owe no tax. It also adds required course materials, possibly including laptops and PCs, to the list of qualifying expenses.

Originally the limits on this credit were for individuals who made less than $48,000 and married couples who filed joint returns less than $96,000. The credit is now open to $80,000 and $160,000 or less. If one’s income(s) are $90,000 or $180,000 respectively, one can also apply, but they won’t get the maximum amounts. It cuts off when one exceeds those numbers.

One gets a full refund for the first $2,000 in tuition, fees and/or costs related to going for a degree. If the costs go beyond that first $2,000, one can have an additional 25% refunded up to the next $2,000. For example, if a school year costs $6,000, one gets a 100% refund for the first $2000, 25% of the next $2,000 (or $500) and nothing for the last $2,000. That’s a total of $2,500 credit when filing one’s 2009 or 2010 income tax.

If there’s one thing the IRS is serious about though, it’s to be careful with what one claims as “cost related”. For example, just buying a computer does not make it worthy of a refund. On the other hand, if the school requires a new laptop for its curriculum, it can be claimed. There is an abundance of information about online scholarships on the web.

Another interesting thing that’s different from the Hope is the Opportunity could turn into a refund. This could happen even if the filer is will get a tax refund without the credit. The difference is the cap is a bit tighter. The maximum refund is only $1,000 instead of the full $2,500.

It should be noted the Opportunity credit is good for 2009 and 2010, although some informed sources are saying President Obama is talking about extending it. It is only good for the first two years of college. For the third year and beyond, one should look for what’s called the Lifetime Learning credit. For further clarification, consult a tax expert, a college financial aid officer or the IRS website.

In addition to convenience, those who take an online college course often do so for financial reasons. Exploring this tax credit, which comes after an outlay of funds, as well as online grant, scholarship, and loan options is a good way to maximize and facilitate your learning.