CHICAGO (STMW) - Illinois families failed to claim more than $1 billion in tax credits for college tuition on their 2009 income tax returns.
The American Opportunity Tax Credit allows families to claim a tax credit of up to $2,500 per student on their 2009 and 2010 tax returns, according to a Sunday release from U.S. Senator Dick Durbin.
The college tuition tax credit provides middle class families with children in college with one dollar back on their taxes for every dollar spent on tuition for the first $2,00 and 25 percent of the next $2,000 for up to $2,500 per year, the release said. Families who do not have enough income tax liability to qualify for the full credit can get a refund worth up to 40 percent of the credit for each student.
Less than half of eligible Illinois families claimed the credit on their 2009 taxes, according to the U.S. Treasury Department.
The average Illinois award is $1,859 in tax savings, but only 38 percent of eligible taxpayers — about 375,000 families — claimed the credit last year, the release said. If the remaining families claimed the credit at the average Illinois rate, and additional $1.13 billion would be awarded.
“Eighty percent of the fastest growing jobs in the nation require some form of higher education,” Durbin said. “If we want our economy to grow, we need to do all we can to support students pursuing a college degree. The American Opportunity Tax Credit makes college more affordable. Unfortunately, hundreds of thousands of Illinois families simply aren’t aware that the tax credit is available to them. The good news: It’s not too late to claim the credit for 2009 or 2010. I’m urging every family with a student in college to take a fresh look at their taxes with this credit in mind. In this challenging economy, every dollar counts.”
Over the last five years, the combined cost of tuition, fees, room and board at four-year public college and universities increased by 42 percent, the release said. In Illinois, two-thirds of undergraduate students take out loans to pay for college and will be in more than $20,000 debt when graduating.
The college tuition tax credit was originally part of the American Recovery and Reinvestment Act, the release said. A two-year extension of the tax credit was included in the tax package President Barack Obama signed into law in December 2010.
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