Student Tax Credits and Deductions
With spring rapidly approaching, many are looking forward to warmer days. But in addition to the changing seasons is a day often dreaded: Tax Day. This year’s filing deadline is April 15th, which is the date income tax returns must be postmarked to be considered as filed on time.
While fear and trepidation are often associated with the Internal Revenue Service, there are some excellent deductions and credits available for student taxpayers that you may not yet be aware of.
American Opportunity Tax
The first credit of significant value to students is the American Opportunity Credit.
This credit can be claimed for expenses in the first four years of post-secondary education. Most students will receive a 1098-T from their college or university indicating the amount of tuition paid and any scholarships or grants received.
The American Opportunity Credit is worth up to $2,500 of the cost of tuition and fees paid during the tax year and 40% of that credit can be refundable. What does that mean? This credit has the potential to reduce your tax liability to zero AND earn you a refund!
Lifetime Learning Credit
Are you in a Master’s degree program? Not to worry, the Lifetime Learning credit might be available for you. This is a nonrefundable credit of up to $2,000 per return. Despite being nonrefundable, the Lifetime Learning credit can help reduce your tax liability. This credit is available for students in all years of postsecondary education as well as those completing courses that acquire or improve job skills.
There is no limit on the number of years you can claim the Lifetime Learning credit, and all tuition, course-related books, supplies, and equipment can be included, up to the $2,000 limit.
Get Free Tax Help
Don’t wait to file your taxes, especially if you think you might owe. We know that filing taxes can be a dreadful and confusing experience for students, but don’t worry, there is help available! Get free help from many Volunteer Income Tax Assistance sites around the country. Use this link: http://irs.treasury.gov/freetaxprep/ to search for free help near you.
Missing out on these resources could result in paying more in taxes than you actually have to or not receiving as big of a refund. Make sure you take full advantage of these resources—they could save you thousands of dollars! Some of them only will only be available while you’re a student, so make sure you don’t miss out.