College is expensive. There is no doubt about how expensive college has gotten over the past few years. Students are struggling under all the debt that they need to pay and keeping up is never as easy as it would seem. While financial aid and working can help to cover some of the costs, this is often going to be a lower than you would anticipate and you most likely have to pay some out of pocket or take out student loans.
This can all quickly get expensive, but that college education is critical to helping you to succeed later in life.
If you are responsible for paying for some of your college education either through student loans or out of pocket, you could get a deduction at the end of the year on your tax return. You will need to keep some good records along the way, but you could end up saving a ton of money if you paid for your education in some way. To get started on learning all of your school deductions and credits, make sure to work with a local tax professional who can find these great savings while answering all of your questions along the way.
Deducting the Interest
The main deduction that most students are encouraged to go for on their tax return is the student loan interest deduction. If you paid any amount on your student loans during the year, you would pay at least a small amount of it in interest. This interest payment can be used as a deduction when you get started on your tax return.
There are a few things to keep in mind though. First, you are only going to be able to deduct a maximum of $2500 on a joint tax return. This means if you spent more than this amount on your interest payments, you will only be able to claim that amount, but any little bit helps. On the other hand, if you only spent $1000, you will only be able to claim that amount as student loan interest over the year. Your tax professional can help you to learn how much and when you can claim this deduction.
It is possible to claim this deduction no matter what kind of student loan you have, whether it is government or private based. In addition, if you make payments at all, whether you are still attending school or out in the workforce, you will still be able to claim this deduction on any of the interest that you pay off. This makes it a great incentive to pay off those student loans as soon as possible, even while in school.
Figuring out how much you are able to deduct for your student loan interest payments is never an easy process. There are a lot of rules in place about deductions and the rules and numbers often change each year. Make sure to contact a tax professional to help you out and to get you the most money back at the end of the year.
Other School Deductions
While deducting your student loan interest payments is one way to save money when you are going to school, there are a few others. If you paid for some other important school expenses out of your own pocket, you could deduct some of these, as long as you have the proper paperwork to prove it. These expenses would be things like tuition, fees, books and supplies. You are able to claim anything that you spent as long as financial aid didn’t reimburse you later on and you are able to prove the expenses.
One thing to keep in mind is that you can’t deduct the amount that you spend on food and living expenses, even if you live on campus during the year. The IRS does not consider these as necessary expenses when it comes to taxes and you could get in trouble if you claim them on your tax return. Talk to your tax professional if you are worried about making claims that don’t apply to you while going to school on your tax return this year.
Getting a Tax Professional to Help
Going to college can get expensive, but it is the only way to ensure that you are taken care of and able to get a good job. But until you can get that job, your financial aid may not be able to help cover the full cost of your education. If you paid out of pocket for expenses that were critical for your education, you deserve to get the right deductions put onto your tax return in order to save some money during tax season. Figuring out which deductions you can claim while in school is not always easy, but with the help of a tax professional, you are going to get this all taken care of in no time and get your best tax refund possible even while in school.
Dealing with your tax returns when you are in school or later on when you are working and trying to pay off your student loans is never an easy task. Consider contacting a professional in your area who knows all about the tax laws and will be able to help you get the best results when it comes to tax season. Contact our offices today to get started on your taxes right away.
Simon Hase, CPA