Everybody knows that college isn’t getting any easier to handle, financially. Students are having a tougher and tougher time getting out of college without a mountain of student loan debt staring them down as they embark on the already-perilous journey of trying to find a career in an economic climate that includes a dauntingly high unemployment rate number. It doesn’t sound good, does it? Well, the good thing is that someone out there seems to have sympathy for the college student of today, as there are a few different options to ease the financial burden of college tuition, books, and the like, especially when it comes to your taxes. You might not realize it, but there are a lot of ways to use your education to your advantage and save serious money when tax season rolls around.
One way to go is with an option that offers you a tax reduction up to about $2500. This is a lot better than a deduction for a lot of different reasons. Items that are tax-deductible are great, but this is only because they lessen your overall income. Instead, the credit simply reduces the amount of money that you have to pay. It’s also refundable for nearly 40%, so regardless of your bill you can still get yourself some money back. This is known as The American Opportunity Credit.
Another credit option is the Lifetime Learning Credit, but this one is a lot less flexible than your other option, The American Opportunity Credit. Your Lifetime Learning Credit won’t be refundable, and the limit is a little lower, giving you only about $200 a year. This option, however, is better for graduate learning, as the American Opportunity Credit can only be use for your earlier, undergraduate years of study. You can even use the Lifetime Learning Credit to get yourself some tax breaks if you’re just wanting to pick up extra skills, which is another distinction that sets it apart from the American Opportunity Credit.
In addition to the credit options, the tuition you pay each year and the various fees your university collects from you are tax deductible, in the way that we discussed earlier. These deductions lessen your overall income so that you pay less taxes, and if you combine them with the credits you’ve got available, then you can save some serious money when April 15th rolls around.
You don’t have to have your master of science in taxation to save some money on taxes every year, and this is doubly true for those students working hard to support themselves while they earn their higher education. Your schooling can work to your advantage in a number of ways, and one of the best ones is by saving you money on your taxes every year. Always make sure you keep thorough records, and your tax situation can be easier than you might ever have thought. A good strategy is all it takes to go about using every advantage you can possibly use to save money in more and more ways every year.