After polling our students at Globe University-Woodbury about what they most want to learn about from our program experts on campus, we learned that they want to read about topics that will aide in both their education and personal lives.
This month, the students specifically asked about filing their taxes as a college student. They asked questions about tax breaks and how their student loans will affect their returns. Thomas Kenney, accounting program chair at the campus, created a brief overview of the tax breaks our students could take advantage of while filing their taxes.
“These are great opportunities every college student should look into,” said David Thom, director of financial aid at Globe University-Woodbury. “As an accredited university, our students could be eligible for one or more of the following tax breaks.”
American Opportunity Tax Credit: Offers eligible taxpaying students a credit of up to $2,500 for each of the first four years of college. Students are eligible to receive up to $1,000 back on their tax return due to the fact that 40 percent of the American Opportunity Credit is refundable. Qualifications do apply.
Lifetime Learning Credit:Available to college students who are enrolled in at least one class at an accredited college (Globe University-Woodbury is accredited by the Accrediting Council for Independent Colleges and Schools, ACICS).
In addition to the American Opportunity Tax Credit, the Lifetime Learning Credit offers 20 percent back on the first $10,000 of annual educational expenses paid. However, to be eligible for the Lifetime Learning Tax Credit, individuals cannot have an adjusted gross income of more than $52,000 and couples cannot have an adjusted gross income of more than $105,000.
Determine your eligibility for the American Opportunity Tax Credit and the Lifetime Learning Credit by filling out IRS Form 8863.
Tuition and Fees Deduction: A college student may be eligible for a tuition and fee education tax deduction if they are not eligible for the American Opportunity Tax Credit and the Lifetime Learning Credit. College students are entitled to a deduction of up to $4,000 for educational expenses. A student cannot claim a deduction on the same expenses they have claimed a credit for. Fill out form 1040, Schedule A.
Student Loan Interest Deduction: A college student and/or graduate may be able to deduct the interest they pay on their student loans.
According to the Internal Revenue Service (IRS), a student can claim the deduction if all of the following apply:
- The student paid interest on a qualified student loan in tax year 2012
- The student is legally obligated to pay interest on a qualified student loan
- The student filing status is “not married filing separately”
- The student modified his/her adjusted gross income is less than a specified amount which is set annually
- The student or his/her spouse, if filing jointly, cannot be claimed as dependents on someone else’s return
Globe University is accredited by Accrediting Council for Independent Colleges and Schools (ACICS). ACICS is listed as a nationally recognized accrediting agency by the U.S. Department of Education and is recognized by the Council for Higher Education Accreditation.
For more information regarding tax breaks contact the IRS.