If you’ve never filed taxes before, your first year in college can be a little daunting. For many, it’s the first time out of the house, earning money and living on their own. If your parents always handled your tax returns, don’t worry—this is just another adulthood milestone to achieve, and you might even get money out of it. We’ve compiled our best college student tax tips to maximize your return in Hayward, CA:
- Ask your parents if they’re claiming you as a dependent: If you’re a single, full-time college student 24 or under, your parents can claim you as a dependent on their taxes—but that may keep you from claiming educational tax credits and breaks. Find out if they’re claiming you, and decide whether it makes sense to ask them not to do so.
- Know your credits: The lifetime learning credit and the American Opportunity Tax Credit (AOTC) both offer great incentives to students. The AOTC allows you to claim up to $2,500 on tuition, fees, books and more, while the lifetime learning credit allows you to deduct up to 20 percent of the first $10,000 you spent on education, up to $2,000. Scholarships and grants must be counted against your payments, and you won’t be able to claim these if you’re a dependent.
- Apply for as many scholarships as possible: Scholarships generally aren’t counted as taxable income, so anything you earn will be tax-free. Plus, it’s free money for school, and who couldn’t use more of that?
- Start making interest-only payments on your loans: Once your school receives your loan money, it starts accruing interest. You can make interest-only payments before the loan comes due, which allows you to claim up to $2,500 on your taxes (assuming your parents don’t claim you as a dependent).
- Don’t outsource your tax preparation: If you have complicated finances and aren’t being claimed as a dependent, you might want to outsource your tax preparation to a professional. For the most part, however, college students have relatively simple returns that you should be able to handle yourself or with the help of free tax software. It will guide you through the tax process and make it easy to get as many deductions as you can.
Going away to college means a lot of new experiences, and filing your own taxes is just one of them. Use this guide when preparing—you might be surprised at just how easy it is.
Get personalized college student tax tips in Hayward, CA
If you’d prefer to have a professional handle your tax return for you, we can help. Menjivar & Company CPAs, Inc. can take the burden out of tax time and make sure your returns are filed properly, doing our best to find all the appropriate deductions to maximize your refund. No matter how complicated your finances may be, our team is ready and able to tackle the job. Call us today to get started, and rest easy knowing your taxes are being handled by experts.
Categorised in: Tax Tips