College education has become expensive with time due to which majority of the students who graduate from three or four-year degree leave college with hefty loan debts. Since education is becoming a huge financial burden for individuals, they are taking up part-time jobs while doing a degree. However, many scholars don't know that universities offer that a few tax benefits. They are entitled to get a tax boost from things, like deductions and credits. So, let’s start by taking a look at how filing your tax return can present a number of benefits:
1. You get a refund on the paid tax
When your tax liability is less than the taxes paid, you get a refund or rebate. Many students who work while studying are unaware that they could be eligible for a student tax refund. If you are self-employed, your tax is deducted from your pay each month. At the end of the year, your country’s tax department will reimburse you with any tax you have overpaid. If you earn money from a work-study, your college will withhold income taxes from your paychecks and give you a refund in when it’s time to file taxes.
2. Tax-free College Savings Accounts
According to our taxation assignment help professionals, there are many college saving accounts that you should know about in order to pay for your college expenses tax-free. The money in these accounts grow tax-free, and you can even withdraw it without paying any tax if the funds are used to meet the education expenses. Such plans allow you to self-direct your investments. Even your state may be giving you a state tax deduction for using such college saving accounts.
3. Student Loan Interest is Deductible
Students loans have become the need of the hour to pay for college fee and expenses. If you have taken a loan, then it's vital for you to know that your student loan interest is deductible up to a specific limit. You can also take the deduction even if you don’t itemize. However, the student loan interest doesn’t apply to everyone. You can only deduct loans if they were taken from a qualified source.
4. Making Income in Two States
A lot of scholars who go to college away from their resident state can make the income in two countries. For instance, if you worked a summer job in your hometown and got a part-time gig in the new town, then you are on the hook for paying tax in both the states. But, you shouldn’t panic as some countries don’t have income taxes. So, if you want to make a double income, then go to the state that doesn’t require you to pay income tax.
5. Tuition And Fees Deduction
Through tuition and fees deduction, you are allowed to get a deduction on your tax return, reducing your taxable income. However, you don’t get back the money if your tax liability is zero as it is a deduction and not a refundable credit. You are eligible for the deduction if you are a student, spouse of a student, or if the student is your dependent. The inference is only applicable to the higher education and not on living expenses, like room and board.
So, now that you know a few benefits that you are entitled to get on your tax return, start availing them and add more savings to your accounts. However, filing your taxes as a college student can be quite daunting, but don’t assume you are doomed as there a lot of ways that can help you in filing your tax returns and decrease your tax burden. Go for it!
College students who earn money from work-study are entitled to get a number of benefits on their tax return. This article highlights a few of such tax benefits.
Author's Score 2.8
Up Votes 42
Down Votes 0
Voted on 16 articles
Comments on 5 Tax Benefits College Students Are Entitled to Get