College students and their families could save up to $2,500 a year if they save receipts for necessary expenses such as textbooks and other course materials.

Under The American Recovery and Reinvestment Act of 2009 and extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, a tax credit of up to $2,500 each year has been authorized for out-of-pocket higher education expenses for course materials, tuition, and fees for 2009 through 2012.

The National Association of College Stores and its more than 3,100 member stores are encouraging students and their families to take advantage of the American Opportunity Tax Credit. Families should consult tax preparers or the IRS on their eligibility for the tax break and keep records of eligible course material expenses incurred.

The American Recovery and Reinvestment Act of 2009 made textbooks and other academically required course materials eligible for a tax credit for the first time. The credit covers textbooks and other course material expenses – as well as tuition and fees not covered by scholarships or grants up—to $2,500 each year for the first four years of college. Forty percent of the credit is refundable.

According to an October 2010 study by the Treasury Department, AOTC recipients in 2009 received an average tax credit of more than $1,700. In addition, 4.5 million students and families received a tax refund from the AOTC in 2009 with an average value of $800. The Treasury Department projects the AOTC will provide nearly $19 billion in credits to over 9 million families in 2012.

NACS has created a Web site, www.textbookaid.org, along with brochures and a Facebook page, in partnership with the Internal Revenue Service to provide accurate information about how to best take advantage of this tax relief. The site includes a summary of the AOTC, explanatory examples, answers to frequently asked questions about the credit, and direct links to further information from the IRS.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access