Calling All Students – Time to File Your Taxes!tax tips | April 10, 2017 | By Susannah McQuitty
The tax deadline is rounding the bend pretty quickly now and, much to the dismay of your study calendar, it doesn’t wait up for students prepping for finals.
To give you a little boost in the right direction, we’ve pulled together some student tax breaks for you (or your parents, if you’re still being claimed as a dependent).
Get an education tax credit
First stop: the credits. You can only choose one (even if you’re eligible for both), so weigh your options and see what works best for you. You also have to be enrolled and paying qualified education expenses – tuition, fees, books and supplies – to claim a credit. All those expenses attributable to 2016 will be listed by your university on a Form 1098-T, which you should have received by now, so make sure you have that form with you when it’s time to file.
- The American Opportunity Tax Credit (AOTC): This $2,500 credit is only available for the first 4 years of higher education but is also refundable up to $1,000. In plain English, if the credit pays for everything you owe in taxes and then some, you could also qualify to get up to $1,000 as a refund.
- The Lifetime Learning Credit (LLC): There isn’t a limit to the number of years you can claim the LLC, so it can be applied to undergraduate, graduate and professional degree courses. It’s worth up to $2,000, but the LLC is not a refundable credit. You won’t get anything extra after the credit covers your tax liability.
Note that if your parents claim you as a dependent on their taxes, they’ll get the credit instead.
Or get an education tax deduction
Unfortunately, you can’t stack tax breaks. You have to choose either a credit or a deduction (except for the Student Loan Interest Deduction – more on that below), and while the credits usually provide better tax benefits, there are times when deductions can come in handy.
- The tuition and fees deduction: This deduction can reduce your tax liability by up to $4,000. You don’t have to itemize to claim the tuition and fees deduction, since it counts as an adjustment to your income.
- Student loan interest deduction: Good news – you can use this deduction regardless of other credits and deductions, so long as you qualify. The Student Loan Interest Deduction allows you to deduct up to $2,500 of student loan interest, including both required and voluntary interest payments. For student loan interest paid during the tax year, you’ll receive Form 1098-E with all the information needed to claim the deduction.
File the easy way
Since your tax information is going to come from your W-2s, we’ll do the math on our end when we process your return. In the time it takes you to sit in study hall, you could be done with your taxes and moving on with your life when you file with 1040.com.