As a college student, you likely have a lot on your plate. From juggling a full course load and spending countless hours in the library to working a part-time or full-time job, the last thing you want to worry about is filing taxes.
Your college years are a transitional period, and while you may not start as a freshman that files your taxes if your parents claim you as a dependent, you may find yourself filing them by your senior year.
Since your schedule is jam-packed with schoolwork and extracurricular activities, it can be easy to put off filing your tax return. But if you miss the deadline, you may find yourself paying additional fees.
To help you navigate what may be your first tax season and make sure you’re getting the largest tax refund possible, AA Tax & Accounting Services has put together a few quick tips for you to follow.
Understand if you’re being claimed as a dependent
During your college years, you may still be considered a dependent of your parents. You can be claimed as a dependent if your parents pay more than 50% of your expenses, and you will be under the age of 24 at the end of the tax year. Even if you decide to file your taxes, you cannot claim your exemption if someone claims you as a dependent.
Your specific situation will determine if you or your parents should claim your exemption. If you pay for nearly 50% of your expenses, you may want to up what you pay for to claim your exemption amount. However, you should also consider your parent’s tax bracket to receive a bigger benefit from the exemption.
If you’re not sure if you should be claimed as a dependent or file your taxes, a tax consultant can help you determine which method will be the most effective.
Take advantage of education tax breaks
As a college student, there are several tax breaks for education that you may be able to take advantage of:
- American Opportunity Credit – Utilizing this tax credit will pay for up to the first $2,000 on tuition, fees, books, supplies, and equipment. You can also receive 25% of the next $2,000 back as a credit, for a total credit of up to $2,500 if you qualify.
- Lifetime Learning Credit – Another option is this tax credit that gives you equal to 20% of your tuition and certain related expenses up to $10,000. The credit maximum is $2,000.
- Tuition and Fees Deduction – Last but certainly not least, you can also take advantage of a deduction of as much as $4,000, which is taken as an adjustment to income.
Navigating tax breaks can be confusing if you’re doing it for the first time. A tax consultant can help you take advantage of any tax breaks available to you to make sure you’re maximizing your tax breaks.
Plan for additional taxes if you attend an out-of-state school
If your physical home address is located in a different state than the school you attend, you may need to pay taxes in multiple states — especially if you have a job while also attending school.
Certain states do not require you to pay income tax, such as Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
Tax consulting services in Cedar City, Utah
Do you still have questions regarding tax planning for college students?
If so, AA Tax & Accounting Services can help you better understand the tax breaks available to you, if you should be claimed as a dependent, and more. No one should go into tax season with their questions unanswered. Our team of tax consultants has the experience of navigating the most effective strategies for college students with our tax consulting services.
The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money. Contact us to schedule an appointment.