Oh joy, it’s getting to be that time of year again…tax time. No one looks forward to it, but nonetheless, it has to be dealt with. Some of you college students out there will be among the lucky ones that will still be filed under your parents as a dependent. Thus, delaying the experience, but some of you won’t be so lucky. This may be your first year having to file on your own, or maybe you’ve been doing it for three or four years already. Either way, we want to share a few tips we’ve come across to help save you the most money possible.
Now, for the record, no one here at Poor Jellyfish is a tax professional. We’re just passing along some information that may be useful in saving you more of your money.
Let’s begin with the obvious: college tuition. The American Opportunity Credit helps students pay for their first four years of college. The maximum annual credit is $2,500 with generally 40% of it being refundable. That means that even if you don’t owe any taxes, you may be able to receive up to $1000.
If you don’t qualify for the American Opportunity Credit, don’t worry. College tuition itself has a tax deduction of up to $4,000. With the Tuition and Fees Deduction your taxable income is reduced, and since this type of deduction is considered an adjustment to income, you can claim it even if you don’t itemize your deductions. Note: Your room and board are not deductible under this (neither is beer). Also you can’t claim the American Opportunity Credit and the Tuition and Fees Deduction in the same year.
Did you buy a new plug-in electric vehicle this year? You may qualify for the new “green” credit of up to $7,500.
There is also the Earned Income Tax Credit, which provides benefits to low- to moderate-income earners. This credit provides more benefits to qualifiers than any other government program, according to the IRS. As a single individual with no eligible children, you must earn less than $13,660 to qualify.
Did you know that you might be able to claim your boyfriend, girlfriend, or couch potato buddy as a dependent? For this to be an option, he or she has to have lived in the same household with you for the entire year, make less than $3,700 in gross income, and you must provide over half the total support for the year.
Since most of you are still in college, the following may not apply as much at the moment, but it definitely will sometime within the next few years.
Once graduation rolls around and your college life is over, it’s into the real world. That means looking for a job and probably moving. Did you know that job-search expenses could be tax-deductible? Résumé copies, outplacement agency fees, career seminars, and business-related travel all may qualify if you actively searched for a job in the same profession. To be eligible though, only your job-search expenses greater than 2% of your adjusted gross income can be claimed. Plus you have to itemize your deductions.
If you moved because of a new job, some of your expenses may be tax-deductible. You have to meet distance and time tests, but you may be eligible even if you don’t itemize.
If you take the entrepreneurial route instead and you work from home, you may be eligible for the Home-Office Deduction. To qualify, you must use part of your home exclusively and regularly as your principal place of business, as a place to meet with customers as part of your business, or where the business portion of your home is a separate structure not attached to your home.
Tax time can be a little overwhelming, but don’t let it stress you out too much. Find someone with some experience, and ask for help. That’s your best bet.