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May 5, 2009
Millions of students and parents struggling to raise cash for college this fall could have a happy surprise early next year: an extra tax refund of up to $2,500.
The new higher education tax credit, which was part of the stimulus bill signed into law in February, is expected to put hundreds, if not thousands, of extra dollars into the pockets of millions of Americans who write tuition checks this year. Better yet, students don't have to fill out any extra financial aid applications to get the new money. They just file their taxes.
"This will definitely help people," says Jackie Perlman, an analyst for H&R Block's Tax Institute.
Of course, like anything in the federal tax code, the rules are a little complicated. But experts like Perlman say the new credit is bigger and more inclusive than previous higher education tax credits, which were so complicated that more than a quarter of eligible taxpayers failed to get a penny, and those who were able to collect typically got less than $900.