If you’ve never filed your taxes before, it can seem a bit intimidating. Thankfully, the average college student’s tax return is fairly simple to complete. With the host of software available, you’ll have no trouble at all filing your federal taxes. However, there are some tips to keep in mind. The following are just five important tax tips for college students.
Check With Your Parents Before Filing
If your parents pay for 50% or more of your living expenses, they have the right to claim you as a dependent on their tax return. This means that you will not be able to claim yourself as a dependent. It also entitles your parents to a number of deductions and tax credits that you would have been able to claim. Before you start gathering documents, make sure they don’t plan to claim you.
Do It Now
Don’t wait until April 15th to start gathering the paperwork to file your taxes. The sooner you get started, the better. Not only will it be less of a headache, but you’ll have enough time to find everything you need. The last thing you want to happen is not find the proper paperwork and miss out on a great credit or deduction. If you plan to have an accountant do your taxes, make an appointment now. Slots fill up quickly this time of the year.
Remember Tax Credits
There are two major tax credits you should be aware of. These credits include the Hope Scholarship Credit and Lifetime Learning Credit, You can find all the information you need on eligibility and how to claim the credits on the IRS website.
Take Available Deductions
Students can also deduct up to $4,000 from their income that is subjected to taxes if they in a post secondary college. However, this deduction cannot be used if the student’s education was paid for using the 529 college savings plan. More details on the Student Loan Interest Deduction and Tuition and Fee Deduction can be found on the IRS website.
Report Financial Aid Used on Non-School Items
Last, but certainly not least, if you used financial aid funds for anything outside of educational expenses, you will need to report the amount as income. For example, if you received a pell grant of $4,000 and spent $1,000 towards household expenses, you would need to report $1,000 as income.
Tax credits and deductions can be a pain, but they can also save you a lot of money. Gather all your paperwork and make an appointment with an accountant. The sooner you get your taxes out of the way, the better. Better yet, the sooner you’ll get a tax refund.
About the Author: Loria Fullagar is in her final semester of college. She looks for cheap textbooks for college, saves every single receipt she has for school expenses, and seeks help with her tax return!