Opportunity tax credit is a partially refundable tax credit. It was introduced by Barack Obama to help families pay for post secondary education where a credit of $2500 will be paid to students in exchange of 100 hours of community service. It was meant to cover a large part of the cost of college fees and education expenses. Any full time college student is eligible for the credit. It also provided a tax credit of $2500 for students in undergraduate courses. It was introduced in 2009 and 2010. There were negative and positive reactions to the tax credit. It prepares students for college and they do not have to worry about the expenses or tuition fees. The tax credit is also refundable meaning; families who are not financially strong enough to pay taxes will get $1000 back.
Eligible expenses
Eligible expenses under the scheme are tuition fees, books expenses and student activity fees. The refund credit is received depending on your income and the amount you actually spend on education expenses. Your family income is also taken into consideration while determining the amount of credit that can be granted to you. Your adjusted income must be $90000 if you are single or $180000 if you are married and filing jointly. To claim your refund, you should file an income tax return even if you do not owe income tax.
The benefits of the tax credit can be gained by any student who has expenses of education including books and student activities. It convinces students to attend college without carrying the worry of the fees or expenses. Many families also benefit from this scheme. Low income families can get a refund of $1000 even if they do not owe any income tax. It is a major tax benefit for higher education. Lowest income group students benefit from the opportunity tax credit. Students need funds at the time they enroll in a university; any delay in the tax credit will not benefit the student. Many students have trouble getting loans from the financial market; the opportunity tax credit can help them to a great extent. It can induce people to begin their post secondary education and complete it all with the help of the tax credit. It will lead to an increase in education and provide better opportunities to the students in the job sector. Qualified students will get better jobs.
Lead to an increase
The credit could lead to an increase in the tuition fees by the colleges which will reduce the benefit to the students. But a major benefit is a reduction in the student loan burdens, not many students will require to take a loan for their education and nor will they have to work throughout their college life. It provides an opportunity to unemployed or under employed workers to complete their education and improve their skills. It could give them a fair chance to get a job and start all over. It can become a boon for many.
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