May 08, 2020
Higher Education Community Endorses Bill to Expand Student Tax Benefits
The higher education community sent a letter to Rep. Lloyd Doggett (D-TX) thanking him for taking the lead on introducing the American Opportunity Student Tax Relief Act of 2020. The legislation would expand certain student and family higher education tax benefits, both during the COVID-19 crisis and beyond. Rep. Brian Fitzpatrick (R-PA) is the lead Republican on the bill.
During the COVID-19 crisis, the bill would make temporary changes, including increasing the American Opportunity Tax Credit (AOTC) from $2,500 to $3,000 and making it easier for students in lower-tuition programs to get the full $2,000 under the Lifetime Learning Credit (LLC). It also ensures that the CARES Act emergency student financial aid grants are not taxable and would codify the recent news that the IRS announced on the tax-free treatment of these grants.
For the longer term, the legislation will consolidate the AOTC and LLC into one simplified, permanent AOTC that will provide up to $2,500 per year in tax relief for students and their families. In addition, the bill replaces current limits on the number of years a student can utilize the AOTC with a $15,000 lifetime cap. Finally, the bill expands the partial refundability of the AOTC from a maximum of $1,000 to $1,500 for both the AOTC and LLC, and better coordinates the interaction of the credit with the Pell Grant, making college more affordable for low- and middle-income students.
During the COVID-19 crisis, the bill would make temporary changes, including increasing the American Opportunity Tax Credit (AOTC) from $2,500 to $3,000 and making it easier for students in lower-tuition programs to get the full $2,000 under the Lifetime Learning Credit (LLC). It also ensures that the CARES Act emergency student financial aid grants are not taxable and would codify the recent news that the IRS announced on the tax-free treatment of these grants.
For the longer term, the legislation will consolidate the AOTC and LLC into one simplified, permanent AOTC that will provide up to $2,500 per year in tax relief for students and their families. In addition, the bill replaces current limits on the number of years a student can utilize the AOTC with a $15,000 lifetime cap. Finally, the bill expands the partial refundability of the AOTC from a maximum of $1,000 to $1,500 for both the AOTC and LLC, and better coordinates the interaction of the credit with the Pell Grant, making college more affordable for low- and middle-income students.
For more information, please contact:
Karin Johns