PROVIDENCE, RI - In an effort to help Rhode Islanders save thousands of dollars, U.S. Senator Jack Reed (D-RI) today joined with CCRI President Ray M. Di Pasquale and Ernest A. Almonte, CPA, and a partner at DiSanto, Priest & Company, in urging Rhode Island students and parents to take advantage of several higher education credits and deductions when filing their federal and state income taxes this spring. In some cases, taxpayers can save up to $2,500 annually on tuition and school expenses. But, according to the latest U.S. Treasury Department data, only 35.7% of eligible Rhode Islanders claimed the credit on their 2009 taxes. As a result, over 51,000 qualified Rhode Islanders failed to claim over $99.1 million in tax savings.
First established under the Recovery Act in 2009, the American Opportunity Tax Credit (AOTC) provides middle-class families with $1 back on their taxes for every $1 spent on undergraduate college education expenses for the first $2,000 and 25% of the next $2,000 for a total of up to $2,500 per year.
"This tax credit is designed to help make college more affordable for middle-class families. I want to ensure that all eligible Rhode Islanders are taking advantage of this opportunity to help pay for college," said Reed, who helped inform hundreds of families about the AOTC at his annual financial aid workshop last fall.
"Higher Education is very grateful to Senator Reed for his outstanding leadership and bringing to the attention of our students this timely and important message. We will notify students and encourage those who qualify to amend their previous tax forms and apply for the refund which will help towards paying their current tuition bills plus applying on their 2010 return for the same credit. This is an amazing opportunity in these very difficult economic times to help our students with their finances and we thank Senator Reed for all he continues to do for RI, students and to help all of us build a stronger America," said Ray M. Di Pasquale, President of the Community College of Rhode Island.
"Last December, Senator Reed helped extend the American Opportunity Tax Credit for an additional two years as part of the Tax Relief and Unemployment Insurance Reauthorization and Job Creation Act of 2010. As a result, the AOTC is available for the years 2009 through 2012," said Ernest A. Almonte, CPA, and a partner at DiSanto, Priest & Company.
Reed also said there is still time for taxpayers who missed out in 2009 to amend their filing and get the proper credit. To determine if you are eligible for the credit visit IRS.gov and fill out form number 8863.
"The good news is there is still time for individuals who neglected to claim this credit to save up to $2,500 to help pay for college. I want to help spread the word and ensure all Rhode Islanders who qualify are claiming this credit and saving up to $10,000 over four years on their college tuition," said Reed.
The AOTC is only available for the first four years of undergraduate studies. However, Reed noted that Rhode Islanders pursuing higher education may also be eligible for other federal tax breaks and deductions, including:
• The Lifetime Learning Credit, which provides up to $2,000 in tax credits for qualified higher education expenses, including graduate school. But filers may not claim both the AOTC and the Lifetime Learning credit for the same student in the same year.
• The Student Loan Interest Deduction, which allows single filers making under $60,000 and repaying student loans to deduct up to $2,500 in interest from their income.
• The Tuition and Fees Deduction, which lets taxpayers deduct up to $4,000 from their income for qualified higher education expenses for themselves or a dependent. This deduction phases out for individuals with income of $65,000 or more and people filing jointly earning $130,000 or more.
Rhode Islanders who need assistance with their taxes may go to IRS.gov or visit the Providence IRS office at 380 Westminster Street. The United Way of Rhode Island may also be able to help provide free tax preparation and filing services to qualified individuals. Simply call the United Way at: 2-1-1. You can also call the Volunteer Income Tax Assistance line at: 1-800-906-9887 or the Rhode Island Society of Certified Public Accountants at: 401-454-5780.