Money tip for students: How to make, use, save it
Income tax season is fast approaching, and students may want to consider these tips to help the process go more smoothly.
Although students may not have earned enough to be required to file, they may get a refund if their employer withheld taxes from their pay. But before filing, students should discuss the tax situation with their parents. Depending on how much they contributed to students’ upkeep during the year, they may be able to claim their children as a deduction on their tax returns, which could save them thousands of dollars.
Students and their parents may be able to take advantage of these deductions or income adjustments on their federal taxes:
• American Opportunity Credit, available for the first four years of college.
• Lifetime Learning Credit, available if a taxpayer or a dependent is taking college courses to acquire or improve job skills.
• Tuition and fees deduction, which lets taxpayers deduct qualified education expenses paid during the year for themselves or a dependent. Expenses must be for college.
• Student loan interest deduction, which lets people deduct up to $2,500 per year on federal taxes for interest paid on federal student loans.
For more detailed information about federal programs, go to www.irs.gov to download the free Publication 970 Tax Benefits for Education.
For more about financial aid and college planning, visit www.alstudentaid.com.