Sigma Tax Pro Comments on the Student and Family Tax Simplification Act Passed By House
The house recently passed legislation that will consolidate the four different tax incentives for higher education into one single tax credit.
DELRAY BEACH, Fla.--(BUSINESS WIRE)--Professional tax preparers have often struggled with the complex nature of higher education tax incentives. The existing four tax incentives consist of the Hope Credit, the American Opportunity Tax Credit, the Lifetime Learning Credit, and the tuition deduction. The new Student and Family Tax Simplification Act would create an expanded American Opportunity Tax Credit. The simplified version would provide for a 100 percent tax credit for the first $2,000 of eligible higher education expenses and a 25 percent tax credit for the next $2,000 of such expenses (for a maximum credit of $2,500). An important piece of the new tax credit is that the first $1,500 would be refundable so taxpayers can receive the credit even if they have not paid any taxes.
Taxpayers would be able use the credit for tuition, other fees as well as books and other necessary educational materials. The idea behind the credit is that it would help lower income families to cope with the rising cost of higher education. It can be used for up to four years of higher education at approved universities, community colleges as well as trade schools. The American Association of Community Colleges, the Association of Community College Trustees, the National Association of College Stores, and the United States Student Association support the legislation but such support is not unanimous within the higher education sector. The College and University Professional Association for Human Resources, the Council for Christian Colleges and Universities, the Council of Graduate Schools, the Hispanic Association of Colleges and Universities, and the National Association of Independent Colleges and Universities and many others have voiced opposition to the bill.
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