Maximizing Your Tax Savings in College
Tax season can be a stressful time of year for college students. Aside from the sometimes-intimidating process of filing, many experience added financial anxiety over how much they may owe. Instead of worrying, take control of your situation this tax year. Look into free filing resources and tax credits available to students to maximize your tax savings. Read on to learn about a few options available.
Lifetime Learning Credit
If you’re enrolled in an eligible educational institution and are working toward an undergraduate, graduate, or professional degree, you may qualify for the lifetime learning credit (LLC) to help pay for tuition and other education expenses. This $2,000 maximum sum is available per tax return, and there is no cap on the number of years you can claim it. If you, your spouse, or dependent are eligible and have been enrolled for at least one academic period beginning in the tax year, this could be advantageous to your financial and educational journey. Filers must have received a Form 1098-T, and income limits do apply. To learn how much you could receive and more, visit https://www.irs.gov/credits-deductions/individuals/llc.
American Opportunity Tax Credit
If you’re in your first four years of college, the American opportunity tax credit could be of great benefit to you. Each eligible student can receive up to $2,500 in tax credit. If you qualify and owe taxes, it could bring your balance to $0. Any additional amount of the credit up to $1,000 can be provided to you as a tax refund.
Additional qualification requirements include pursuing a degree or other suitable education credential, being enrolled at least half time for at least one academic period beginning in the tax year, not finishing your first four years of higher education at the beginning of the tax year, not claiming the Hope or American opportunity tax credit for more than four tax years, and not having a felony drug conviction at the end of the tax year. Interested filers should bring their 1098-T form to their tax appointment. To read up on income limits and other considerations, go to https://www.irs.gov/credits-deductions/individuals/aotc.
IRS Free File
If you’re looking to file your federal income taxes for free, look no further! The IRS Free File Program allows qualified taxpayers access to free, online tax services in partnership with many tax preparation and filing software industry companies. If your adjusted gross income is $73,000 or less, guided tax preparation services are available to you from IRS partner sites. In certain situations, free state tax preparation and filing are also free. To learn more about what you’ll need to get started, go to https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
Money can be tight for college students but give yourself a break this tax season by using applicable credits and free-file offerings. Maximizing your tax savings can allow you the financial freedom to do what you want with your money rather than paying more than you need to Uncle Sam. Consider these options, talk with your tax consultant, and rejoice rather than stress this tax season!
Sources:
https://www.irs.gov/credits-deductions/individuals/llc
https://www.irs.gov/credits-deductions/individuals/aotc
https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
