Tax Credit Argumentative Essay
The federal government provides Education Tax Credits as an incentive to encourage more people to pursue a higher education and to reduce a taxpayer’s tax liability. What does a tax credit do? A tax credit reduces the amount of income tax you may have to pay. Instead of decreasing the amount of income subject to tax, it decreases the tax itself. Education credits are considered as an incentive for people to pursue a higher education. There was controversy with this issue because some people did not think that education tax credits increase the enrollment in higher education institutions. “While these credits proved to be beneficial to many taxpayers over the past decade, the National Association for Student Financial Aid Administrators states
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As we stated earlier the (ARRA) created the American Opportunity Tax credit as a replacement for the Hope credit. Because of the modifications made to the Hope credit, the American Opportunity credit provides additional benefits including stimulating the economy, making credit available to a broader range of taxpayers, and adding course material to qualifying expenses.
As specified by the IRS, “The American Opportunity Tax credit modifies the existing Hope credit. The AOTC makes the Hope credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The benefit of this credit is that it allows you to claim a credit of up to $2,500 for the qualified expenses. It also allows you to add required course materials that you bought to the list of qualifying expenses. You can claim this credit for up to four post-secondary education years instead of two. “Many of those eligible will qualify for the maximum annual credit of $2,500 per student” (IRS, 2017 ). The good thing about the American Opportunity credit is that 40 percent of it is refundable, which means that if the refundable portion of your credit is more than your tax liability the extra will be refunded to you. This is a great benefit because you
As we stated earlier the (ARRA) created the American Opportunity Tax credit as a replacement for the Hope credit. Because of the modifications made to the Hope credit, the American Opportunity credit provides additional benefits including stimulating the economy, making credit available to a broader range of taxpayers, and adding course material to qualifying expenses.
As specified by the IRS, “The American Opportunity Tax credit modifies the existing Hope credit. The AOTC makes the Hope credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The benefit of this credit is that it allows you to claim a credit of up to $2,500 for the qualified expenses. It also allows you to add required course materials that you bought to the list of qualifying expenses. You can claim this credit for up to four post-secondary education years instead of two. “Many of those eligible will qualify for the maximum annual credit of $2,500 per student” (IRS, 2017 ). The good thing about the American Opportunity credit is that 40 percent of it is refundable, which means that if the refundable portion of your credit is more than your tax liability the extra will be refunded to you. This is a great benefit because you