U.S. Senator Mark Pryor today encouraged Arkansas colleges and universities to spread the word about a tax credit Arkansans can use to help offset the cost of college tuition.
“Helping our students afford a college education is critical to our economy now and in the future,” Pryor said. “That is why I’m asking college administrators to spread the word about a relatively new tax benefit available to students or their families. Every penny counts for students struggling with rising tuition costs and student debt.”
The college tuition tax credit provides middle-class families with children in college with $1 back on their taxes for every $1 spent on tuition for the first $2,000 and 25 percent of the next $2,000 for up to $2,500 per year. For families with children in college who do not have enough income tax liability to qualify for the full credit, the law provides a refund worth up to 40 percent of the credit for each student.
The U.S. Department of Treasury stated that Arkansans filed 58,000 claims or approximately 31.7% of the total claims available to the state. As a result, Arkansas families left nearly $200 million on the table by not claiming this tax credit.
Pryor’s letter to Arkansas colleges and universities explaining the benefits of tax credit is pasted below:
“As you know, helping our students afford a college education is critical to our economy now and in the future. That is why I’m seeking your help to spread the word about a relatively new tax benefit available to students and their families.”
“The American Opportunity Tax Credit, originally included in the American Recovery and Reinvestment Act, allows students to claim a tax credit of up to $2,500 per student. According to the Department of Treasury, less than one third of Arkansas families with tuition expenses filed claims for this benefit on their tax year 2009 returns. An estimated $200 million remain unclaimed for Arkansas families.”
“Over the past several years, we have witnessed a sharp increase in the aggregate cost of tuition, fees, and room and board expenses at four-year public colleges and universities. We have also seen a recent rise in the number of college graduates accruing student loan debt. Specifically, in Arkansas, studies show that more than fifty percent of our students at public four-year institutions take out loans to pay for their higher education. Recent figures show an estimated $20,000, on average, in debt per student in the state upon graduation.”
“In light of these rising costs, we should all work together to identify simple ways to alleviate pressure on our students and their families – especially in an economy as turbulent and tough as the one we’re facing.”
“To claim the American Opportunity Tax Credit for tax year 2009 and 2010 income tax returns, students or their families need to complete Form 8863 at http://www.irs.gov/pub/irs-pdf/f8863.pdf and follow the instructions there.”
