April 15th is right around the corner and the majority of the working world is scrambling to find all of those end-of-the-year statements that have been decorating the kitchen for the past three months. However, as college students, the infamous Tax Day has left us pretty unfazed. So, the question is, as college students, do we need to know anything about taxes? Here’s a quick list of information to clear things up for you:
- It is never too early to understand taxes.Taking responsibility for your financial future is a power that no one can take away from you—why would you want to jeopardize or marginalize that?
- Independent or Not: Before April 15—if you have been working during the year 2010—it is important to find out whether your parents are filing with you as a “dependent.” If so, no need to file a return this year… you’re in the clear. If not, you’re in even better shape… Can you say, tax return?!
- So, now what?Well, if you have a relatively simple tax return (few to no investments in mutual funds, stocks, bonds, etc., pretty clear cut income from one source, etc.) then you should be fine picking up TurboTax or one of those Do-It-Yourself Tax Programs. If you are not too computer savvy, consider visiting the local H&R Block (located at 295 Broadway); companies like this tend to have special student discounts because, to be honest with you, the majority of our tax returns take them about 5 minutes to prepare.
Fun Fact for College Students and Taxes:
As students, we can deduct our school expenses. Meaning: tuition, textbooks, and all related school supplies, when reported to the IRS, can result in qualifying for the American Opportunity or Lifetime Learning Credit (of course, like all taxes, there is a boatload of fine print involved… hence why so many people prefer going to an accountant: they are required to stay current with all of the tax laws/requirements, which change each year). But according to the IRS, “the American Opportunity Credit allows taxpayers to claim a credit of up to $2,500 based on qualified tuition and related expenses paid for each eligible student.” Not too shabby. And if that’s not good enough, “Taxpayers may claim a Lifetime Learning Credit of up to $2,000 based on qualified tuition and related expenses paid for all eligible students enrolled in eligible educational institutions.” But here’s the catch: you can’t claim both credits on the same expenses. So what do you do? Split up your expenses and get both!
Websites With More Helpful Info:
IRS:
http://www.irs.gov/app/understandingTaxes/student/index.jsp
Students. Org: http://www.students.gov/STUGOVWebApp/Public?topicID=111&operation=topic
Wallstreet Journal Article of Interest:
http://www.smartmoney.com/personal-finance/college-planning/the-college-tax-breaks-explained-9644/
And as always, we here at MoneyMatters love to hear from readers so never hesitate to comment below with your questions. Also, we’d love to hear your feedback… what do YOU as a female, undergraduate at Skidmore College want to know about money? Let us know!