Hi,
Does anyone know if income put into a tax-deferred account "counts" as income for reaching the limit on the Hope Scholarship Tax Credit? I am thinking specifically of a deferred income account vs. a retirement account, but I suppose my question pertains to both.
Thanks.
From the web:
The Hope Scholarship provides a federal income tax credit based on the first $4,000 in postsecondary education expenses paid by the taxpayer during the tax year.
Changes for 2009 and 2010
The American Recovery and Reinvestment Act of 2009 (P.L. 111-5) included the American Opportunity Tax Credit, which expands the Hope Scholarship. This expansion is temporary, limited to the 2009 and 2010 tax years. However, President Obama's FY2010 budget proposes making these changes permanent. The changes are as follows:
Increases the amount from $1,800 to $2,500.
The amount of the credit is 100% of the first $2,000 in qualified expenses and 25% of the second $2,000. (Previously it was 100% of the first $1,200 and 50% of the second $1,200.)
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The number of years allowed was increased from 2 to 4.
The income phaseouts were increased to $80,000/$90,000 (single filers) and $160,000/$180,000 (joint filers).
Course materials added as a qualified expense in addition to tuition and fees.
40% refundable (max $1,000) to allow even low income students who have no tax liability to obtain a partial benefit.