» By Diona Gardner
Are you filing your own taxes this year? Do you feel overwhelmed and lost? The deadline to file a federal income tax return is Monday, April 15.
According to the IRS, nearly 100 million taxpayers opted last year for the safest, fastest and easiest way to submit their individual tax returns — IRS e-file. If one’s income is less than $57,000, the IRS recommends using their free tax tool. The 1040 series are available online at www.irs.gov for free filing. The 1040, 1040-A and 1040-EZ are included in the 1040 series. Most of the information needed will be found on a W-2 form., provided by the employer.
Niesha Wolfe, APSU accounting instructor, advised, “The most common errors I have found with students completing their own tax returns is that they do not research the benefits of being a college student thoroughly. This means that they may be unaware of the following deductions or credits: Education Deduction, Education Credits, and Student Loan Interest Deduction.”
The Education Credits come directly from the student’s tax liability amount and is filed using Form 8863. There are two credits that qualify but only one can be used per return.
The American Opportunity Credit has a maximum payout of $2500. Students can file single with a maximum AGI of $80,000 or married on a joint return with a maximum AGI of $160,000. The American Opportunity Credit is only used for undergraduate student tuition and expenses.
The Lifetime Learning Credit is typically better for graduate students with the same AGI and filing requirements as The American Opportunity Credit. The maximum credit is $2,000.
The Education Deduction can be filed using Form 8917. This form is for the Tuition and Fees Deduction and should only be used if none of the Education Credits apply. The maximum deduction is $4,000 per taxpayer. The Adjusted Gross Income maximum for a single person, or Head of Household, or Qualifying Widower is $65,000 or if filing married, the cutoff AGI is $130,000.
Student Loan Interest Deduction is taken directly on the 1040 forms. The maximum deduction is $2500 per student. If filing singly the AGI cannot exceed $75,000, if married filing joint the maximum is $150,000.
The Lifetime Learning Credit which is typically better for graduate students and the maximum credit is $2,000.
Information for all student tuition and fees deductions or credits should be taken from the Form 1098-T (1098-Tuition) which is supplied by the university to the student and reports student (or parent) payments for qualified tuition and related expenses.
“Students should block off at least one hour to go through the IRS tutorial for free efile,” Wolfe said. “So, that they don’t make any mistakes and can take all the deductions or credits allowed to them.”
If one’s tax return involves more than two W-2 forms and several deductions, it is recommended to invest in tax preparation software or hire a tax professional.
If assistance is needed with tuition, scholarship, and education credits contact the office of Financial Aid at 931-221-6329 or email@example.com. For more info on filing your tax returns, various forms, or obtaining an extension, visit www.irs.gov.