Ask the County Law Librarian — American Opportunity Tax Credit Scam

Q. A friend of mine told me that a company called SOS America is offering $500 Visa Cards to people who are eligible for the American Opportunity Act education credit. All I have to do is fax photocopies of my Driver’s License and Social Security Card. I’m a broke college student, and I sure could use the money, especially right before the Holidays. What is the American Opportunity Act education credit? How can I get in touch with the SOS America company?

A. Stop, Emily, Stop! This is a scam! If they do somehow manage to contact you, report them to the IRS at 800-829-1040, or inform the local Sacramento office at 4300 Watt Ave., (916) 974-5225, Sacramento, CA 95821. You can usually tell a scam because, as my mother always said, and I’m sure yours did, too, “If it is too good to be true, it probably is.” But, don’t take my word for it. Here are a couple of web articles about the scam:

http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2012/03/beware-tax-scam-illegally-claiming-the-american-opportunity-education-tax-credit.html

http://blog.cahealthadvocates.org/2011/08/american-opportunity-act-scam/

The American Opportunity Act education credit, however, is a good thing, and may benefit you if you file a tax return. Officially known as the American Opportunity Tax Credit, it was to expire at the end of 2010, but was extended for an additional two years–through December 2012–by the Tax Relief and Job Creation Act of 2010. The modification of an existing education tax credit (called the Hope Credit) under the American Recovery and Reinvestment Act of 2009 (commonly known as the “Stimulus” Act) expanded the credit to a broader range of taxpayers, including many with higher incomes and those who owe no tax, added required course materials to the list of qualifying expenses, and allowed the credit to be claimed for four post-secondary education years instead of two.

The maximum annual credit of $2,500 per student is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.

Good luck in school, Emily, and Happy Holidays! Enjoy your break!

 

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November 21, 2012 | 10:17 AM

Do you have a question for the County Law Librarian? Just email sacpress@saclaw.org. If your question is selected your answer will appear in next Thursday’s column. Even if your question isn’t selected, though, I will still respond within two weeks.

Coral Henning, Director
@coralh & @saclawlibrarian
http://www.saclaw.org

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