White House Pushes to Extend College Tuition Credit

The popular American Opportunity Tax Credit helped an estimated 12 million college students pay for their education. The popular credit is set to expire at the end of the year, however the President has suggested extending the credit to continue helping students who cannot afford to pay for college.

CNN Money.com reports:

The American Opportunity Tax Credit helped soften the blow of college tuition for more than 12 million students last year, but it's due to expire at the end of this year unless President Obama gets his way.

To remind Congress of the importance of extending the credit, top government advisers spoke to reporters Wednesday about why they believe the break is worth keeping around.

"[Obama] believes that it is important for this to be extended and for families to have the certainty and confidence that this [credit] will be there when they are making the choices about sending their children to college," said Gene Sperling, Counselor to the Treasury Secretary.

The tax break, introduced under the government's 2009 Recovery Act and applicable to 2009 or 2010 college tuition, expands the existing Hope Credit to include more lower- and higher-income Americans.

Unlike the Hope Credit, the AOTC is also partially refundable and covers more of the expenses associated with sending a child to college, like textbooks and computers. It is available for the first four years of post-secondary education, up from two years under the Hope Credit.

Read more here

Summer Tax Institute at the University of California, Davis

While most people aren’t likely to associate the warm summer season with taxes, many tax professionals certainly are. The twentieth annual Summer Tax Institute is scheduled for June 14-17, 2010 in California. The institute is an educational program of the Center for State and Local Taxation.

The Summer Tax Institute is an intensive, 4-day educational program for professionals that attracts attorneys, accountants, state tax officials, tax directors, tax managers, and others seeking expertise in the area of state and local taxation. A certificate of completion (for continuing education purposes) is provided at the end of the program.

The program is said to be highly successful. According to the UC Davis Summer Tax website, www.summertax.org, it states that in written evaluations it has been indicated that over 95 percent of the participants would recommend the Institute to others. Also, students come from both the public and private sectors and represent accounting firms, law firms, state agencies, and private industry from throughout the country.

The site also boasts that tuition includes course materials, daily continental breakfast and lunch, a welcome reception on Monday night, and an excursion to the wine country for “dinner amid the vineyards” on Wednesday evening. It looks like the Summer Tax Institute reaches enrollment capacity most years, therefore, early registration is strongly recommended. What are you waiting for tax professionals?!

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U.S. State Revenue Fell 16% in Fiscal 2008, Census Bureau Says

From Bloomberg.com:

U.S. state government collections fell 16 percent to almost $1.7 trillion in fiscal 2008 from a year earlier, while spending increased 6.2 percent, according to the U.S. Census Bureau.

The biggest drop came in so-called insurance trust revenue, which slid $377.7 billion, or 73 percent, the federal agency reported today. Such funds include public employee retirement systems, unemployment compensation and worker compensation funds, many financed with payroll taxes and other worker contributions, according to the bureau.

Spending exceeded $1.7 trillion for the combined states, according to the report. Education, at $546.8 billion, public welfare, $412.1 billion, and highways, $107.2 billion, consumed almost two-thirds of the outlays, the Census Bureau said. State records showed lottery sales rose 1.8 percent from the previous year, to $77.3 billion.

Eleven states spent more than one-fourth of their total expenditures on public welfare such as health care and assistance to the needy, led by Tennessee at 33 percent, Maine at 31 percent and Rhode Island at 30 percent.

Many Parents Inaccurately Claim College Tax Credit

From USAToday:

More than 314,000 taxpayers made inaccurate claims for a popular tax credit that helps pay college expenses, getting $532 million they weren't entitled to receive, a government report said Thursday.

The Hope Credit provides up to $1,650 a year to help pay expenses for the first two years of college. The taxpayers claimed the credit for the same student three consecutive years, instead of the two years available, said a report by the Treasury inspector general for tax administration. Auditors reviewed two three-year periods, ending in 2006 and 2007. About 58,000 claimed the credit a fourth consecutive year in 2007. The inspector general's report do not list names of taxpayers.

The report said the Internal Revenue Service needs better tools to detect and fix inaccurate claims, and the IRS agreed. The problem should ease since Congress has expanded the credit to four years of college, for those claiming the credit in 2009 and 2010.

"The Hope Credit is intended to help taxpayers pay for the ever increasing cost of higher education," said J. Russell George, the Treasury inspector general for tax administration. "It is imperative that the IRS works with the Treasury Department and Congress to obtain the tools it needs to effectively administer this important credit."

The report recommended that Congress authorize the IRS to fix tax returns that incorrectly claim the credit, much in the same way the agency fixes routine math errors. It also recommended new reporting requirements to help the IRS match expenses claimed by students with those reported by schools.

College Saving: How To Avoid Losses, Save On Taxes

It is back to school time for kids and college students alike. As such dozens of news outlets are running stories on saving for college. Yesterday, I came across this interesting article from Philly.com explaining how to save for college while avoiding losses. Check out the text of their article below, or for more information your can read this article on the RDTC Tax Help Blog titled Top 10 Tax Planning Tips for Families with Children.

As parents of young children see teenagers head off to college for the fall semester, they may be fretting about how they'll be able to meet the rising cost of tuition when their time comes.

That includes looking at 529 plans that offer special tax benefits on college savings and are named after the Internal Revenue Service code that regulates them. Accounts can be set up through a state agency or pre-paid university and college programs.

Let's look at the tax advantages, the home-state factor and the best way to protect the account from market losses.

Q: What are the tax advantages of a 529 plan?

A: Earnings in 529 plans are not subject to federal tax, and in most cases you do not pay state taxes as long as you use the money for eligible college expenses. That typically means tuition, room and board, and mandatory fees. Books and computers also qualify when they are required.

Money taken out of the account for reasons other than college expenses will be subject to income tax and a 10 percent federal tax penalty.

The Securities and Exchange Commission offers an introduction to 529 plans with some basic information on taxes and other issues on its Web site at: http://www.sec.gov/investor/pubs/intro529.htm.

Continue reading at Philly.com…

College Saving: How To Avoid Losses, Save On Taxes

It is back to school time for kids and college students alike. As such dozens of news outlets are running stories on saving for college. Yesterday, I came across this interesting article from Philly.com explaining how to save for college while avoiding losses. Check out the text of their article below, or for more information your can read this article on the RDTC Tax Help Blog titled Top 10 Tax Planning Tips for Families with Children.

As parents of young children see teenagers head off to college for the fall semester, they may be fretting about how they'll be able to meet the rising cost of tuition when their time comes.

That includes looking at 529 plans that offer special tax benefits on college savings and are named after the Internal Revenue Service code that regulates them. Accounts can be set up through a state agency or pre-paid university and college programs.

Let's look at the tax advantages, the home-state factor and the best way to protect the account from market losses.

Q: What are the tax advantages of a 529 plan?

A: Earnings in 529 plans are not subject to federal tax, and in most cases you do not pay state taxes as long as you use the money for eligible college expenses. That typically means tuition, room and board, and mandatory fees. Books and computers also qualify when they are required.

Money taken out of the account for reasons other than college expenses will be subject to income tax and a 10 percent federal tax penalty.

The Securities and Exchange Commission offers an introduction to 529 plans with some basic information on taxes and other issues on its Web site at: http://www.sec.gov/investor/pubs/intro529.htm.

Continue reading at Philly.com…

Budget Cuts Devastate California Higher Education

From the Associated Press:

When California college students return to campus this fall, they'll find crowded classrooms, less access to faculty and counselors, fewer campus services and more difficulty getting classes they need to graduate — all while paying higher fees.

The state's financial crisis is battering its world-renowned system of higher education, reducing college opportunities for residents and threatening California's economic recovery.

Faced with steep declines in tax revenue, states are reducing funding to public colleges and universities across the country. That could hamper the nation's rebound from a deep recession and undermine President Barack Obama's goal of making the U.S. the world leader in college graduates by 2020, experts say.

"It's going to be harder for me to continue to be in school," said Nancy Santana, 25, a single mother who attends San Diego's Miramar College and worries her financial aid will be reduced. "I may be forced to cut school and find a job without a degree."

No state is cutting more deeply than California, which has more than 3 million students attending college.

To close its massive budget deficit, the state has slashed funding to its 110 community colleges, the 23-campus California State University and the 10-campus University of California, one of the nation's leading research institutions.

The schools have responded by boosting fees, turning away record numbers of students, expanding class sizes, eliminating programs, laying off staff, and furloughing professors and other employees.

Tax Tips for Teachers

Summer break is—unfortunately—winding down for students and teachers alike. While teachers all over the country will soon start planning their lessons, this is also the prime time to get your tax files in order. Teachers are in a great position to reduce their tax burden, but it takes time, effort and some thought.

Like anyone else, the best way for teachers to save money on their taxes is to get educated and get organized. If you know what tax breaks you are entitled to, you can actually claim them. And if you have all your tax documentation organized, you’ll be able to prove that you are entitled to each credit, deduction and exemption.

Teachers in particular have a great way to save money on their taxes: the Educator Expenses Deduction. The IRS recognizes that teachers often spend their own money on classroom supplies. Therefore, this deduction is good for up to $250 every year ($500 if your spouse is also a teacher and you file jointly).

While you do not have to itemize deductions to get this deduction, you do have to be organized. Too many teachers keep sloppy records, then can not find their receipts. To help you get organized, here is what I recommend. Create a file labeled “Classroom Expenses”. Keep the file handy so it is easier to properly file receipts than to throw them on the counter. You can go a step further and attach your receipts to a piece of paper with the purpose of the expense written in. You probably will not remember that you spent $5.89 on pencils for your classroom 9 months from now and some receipts are a little difficult to read. This extra step can save you a lot of squinting at receipt tape come tax season.

If you get your system in order now, you will be all set to file your receipts when you go shopping for supplies next month.

Tuesday Linkage

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