Take Advantage of Tax Credits and Deductions for Students
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 17th, 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. 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!
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.
Don’t wait to file your taxes, even if you think you might owe. Free help is available at many Volunteer Income Tax Assistance sites around the country. Use this link: http://irs.treasury.gov/freetaxprep/ to search for free help near you!
Amanda Conley is the Department Chair for the Stevens-Henager Online Accounting Department. She has a Masters of Business Administration and Bachelor of Science in Management and Business Information Systems from George Fox University. Amanda teaches accounting courses to both accounting and business majors. She has over 10 years of experience in accounting, is the site coordinator for Volunteer Income Tax Assistance Site, and holds the Treasurer position for a local non-profit.