Student Deductions: Save Money with Tax Preparation

by Student Contributor

Julia Setterfield, over at Degree Pivot, wrote a post earlier in the year about the importance of college students getting a head start on their taxes and we agree. How many times have I and my roommates burned through a lot of junk food trying to get our taxes caught up at the last minute? Well, I won’t tell you. But, I can tell you that just as Julia said, “No one likes preparing tax return forms each year, with the vast amount of regulations put in place by the IRS you must abide by.”

Yeah, well, that’s an understatement, isn’t it?  She goes on to say, “these forms can be even more daunting for college students because of the amount of student loans, scholarships and grants they must have the correct tax information for.”

Yep. Been there. Done that.

Whether you are a new student or someone who has done this before, there is always something to learn. These darn regulations change yearly! That’s why it makes sense to get some professional help from a reputable online preparation service, like, say… Tax Legend.

Some of the most common things to consider are:
  • Hope Scholarship credit: The Hope Scholarship Credit is available to students within the first four years of their education and allows a deduction of up to $2,500.
  • Lifetime Learning Credit: The Lifetime Learning Credit can be taken advantage of by most students. There is no limit to the amount of years students can apply this credit to their tax returns and can account for up to $2,000 per year.
  • American Opportunity Credit: The American Opportunity Credit is the most widely used credits by students. In most cases it is available to students who have a gross income of $80,000 or less ($160,000 for married couples). This credit can account for up to $2,500 per student.
  • Student loan Interest: Up to $2,500 per year may be deducted if you are repaying a student loan. This applies to students who are still in education and repaying their loan, or students who have graduated and are repaying their student loan.
  • Tuition Deductions: Tuition and fee deductions are available to students in their last year. If you are a student and are earning less than $65,000 each year and can be worth up to $4,000 in some cases.
  • College Savings: Many people are entitled to a tax deduction on money they have in a college savings plan. You may be entitled to receive this deduction if you are saving for your, or a dependents college tuition.

Look, we have enough on our plates with school, work and who knows what else. We don’t have time to be experts in this, too. At least I don’t. If you do, more power to you. If you don’t, then rely on Tax Legend to ensure you get credit for all the right stuff. See you soon.