The Stimulus Act and How it Affects Your College Savings

Joe Hurley of Savingforcollege.com wrote a great article, “How The Stimulus Act Affects Your College Savings”, that provides significant information important to your goal of saving and funding your college education. The article is based on the $787 billion American Recovery and Reinvestment Act of 2009, signed by President Obama, and it’s effects on your 529 college savings account.

Important Note: The following is a list of highlights presented by Joe Hurley in his article. Please remember to always perform due diligence and investigate each highlight to ensure that they are still available and that you are eligible.

The American Recovery and Reinvestment Act of 2009,  Hope Scholarship Credit, andAmerican Opportunity Tax Credit provide a number of new benefits. The following is a partial list of those benefits. For the full list, please read Joe’s newsletter

• For the years 2009-2010: ” the list of eligible 529 expenses is expanded to include purchases of computer technology and equipment, along with Internet access for students and their families.” according to Joe
• According to Joe “starting again in 2011, computers etc. do not qualify unless required by the educational institution as a condition of enrollment or attendance.”
• In 2009-2010 The Hope Scholarship is more robust under the Act
• The New temporary version (of Hope Scholarship) the American Opportunity Tax Credit is available to more families than the Hope Scholarship
• American Opportunity Tax Credit can be used in the 3rd and 4th years of college in ADDITION to the first 2 years
• Course materials are eligible as an expense
• The credit phases out at a higher range of $160,000-$180,000 for joint filers and $80,000-$90,000 for all others
• Maximum annual credit amount increases from $1,800 in 2008 to $2,500 for this year and next. 100% of the first $2,000 of eligible expenses plus 25% of the next $2,000 of eligible expenses
• In addition it can be applied against the alternative minimum tax
• And it’s up to 40% refundable for students not subject to the kiddie tax