When it comes time to file your taxes, you may forget about some of the tax deductions that you can take. In fact, there are many different deductions that you may qualify for and many people do not even know they qualify for some. If you visit a CPA or tax preparer, you will find that the person guides you and helps you claim all deductions you can. But, if you file your taxes yourself, you may be leaving a lot of money on the table. A new study conducted by Harris Polls showed that Millennials fear taxes. But taxes don’t have to be so bad.
Below, we will go over some tax deductions that you need to keep in mind and of course, claim them if you can.
- Lifetime Learning Credit
The lifetime learning credit is one that is often overlooked, but it can offer students an opportunity to earn some money back. Students who qualify to claim this credit will need to make less than $60,000, if they are single and less than $120,000, if they are married. You can claim up to $2,000 in education expenses, which includes things such as books, laptops, and any other products or supplies you purchased to be used at school.
- American Opportunity Credit
The American Opportunity Credit is another credit that should not be overlooked as it also offers students the opportunity to earn some money back in their pocket or at least reduce their tax bill. This credit allows students to claim up to $2,500 for the first four years that they attend a post-secondary educational institution.
An estimated 40 percent of this credit is considered refundable, which means students receive an estimate refund of $1,000 from this credit. That means if you already expect to receive $2,000 back, you can add this $1,000 for a $3,000 refund. Pretty awesome, right?
To claim this credit, you must have qualifying expenses, which include books for classes, tuition, lab fees, etc. In addition, students must meet financial eligibility requirements too. Married couples cannot make over $160,000 and single couples cannot make over $80,000.
- Student Loan Interest Deduction
Student loans. Not those two words again. If this is what is running through your mind right now, know that we sympathize with you. Since student loan debt is well into the $30,000 range per student, we know how difficult it can be to keep up with your payments.
The student loan interest deduction is one deduction that you may want to look into when filing your taxes. In fact, if you have any federal or private student loans, then you likely qualify. This deduction allows each student to deduct up to $2,500 of the interest they paid throughout the year. One of the best things about this deduction is that you do not have to worry about itemizing your taxes to receive this deduction.
- Tuition and Fee Deductions
Another helpful deduction comes in the form of being able to deduct your tuition and fees. Most students are eligible to take up to $4,000 worth of tuition and expenses off of their taxes per year. To qualify for this deduction, you or your spouse, or dependents must have paid the tuition or fees. Like the student loan interest deduction, you do not have to itemize your taxes to receive this deduction, which makes it worth it in the long run.
Of course, there are some additional qualifiers that you need to consider which include making less than the threshold income and making sure that your expenses qualify as educational expenses. Typically, students who find that their income is too high for the lifetime learning credit are able to claim this credit and it benefits them more.
Final Thoughts on Tax Deductions
There are many tax deductions and credits that can help you when it comes time to file your taxes. Sometimes, you will receive a deduction and sometimes you will receive a refund that goes straight into your pocket. Before you start to claim all of the deductions you see, make sure you qualify for them first because if you do not, you will find yourself in trouble with the IRS.
If you are unsure of how to file your taxes or claim the deductions you want, consult with a tax preparer or CPA first.
Comment on Don’t Forget to Take Advantage of These Tax Deductions
These are all great deductions that shouldn't be overlooked. Sadly they all have income restrictions, so they don;t apply to all. But with the feds, if you can take the deductions, do take them. Thanks for sharing.
My recent post Dividends Earned – April 2016
Nice coverage of some tax deductions that people may be overlooking.
My recent post Cream City Hustle: Chapter Two, Part I
There are soooooo many tax deductions that exist it's impossible to be aware of every single one. Even accountants and CPAs can't possibly know every deduction out there. It's great to know that a lot of education based deductions exist yet students are graduating with more and more debt and are under an ever increasing financial burden.
My recent post Dividend Investing In A ‘Mad Men’ World