I received my federal tax refund this week! I haven’t done my state and local yet, but I like to do the federal early. If you haven’t started thinking about filing your income tax yet, it’s probably time. I, like many, hate the process, so don’t feel bad if you do too.
I’m thankful that there is lots of help out there. There are a couple of different options to get help with your taxes: in person or in the form of computer software. Many people just run in fear from the idea of taxes and assume their best option is to go to the local tax prep office and have somebody else do it. This is going to be a pricey option. If your tax picture is simple (e.g.: standard deduction and just wages and interest for income) there’s absolutely no reason to pay someone else to do this for you. You can easily do it yourself. If you have itemized deductions and capital gains, it’s a little more complicated, but you should still be able to handle it with the help of a computer program. You can find a list of several good ones here.
Please remember that if your adjusted gross income for 2015 is less than $62,000 you are able to e-file and receive tax preparation assistance at no charge.
Also, keep in mind that you may be eligible for some educational tax benefits. You should soon be receiving your Form 1098-T from the University (or you can find it on eLion under “Taxes—1098-T Credits” in the Financial section). This will help you to calculate your eligibility for these benefits.
The Lifetime Learning Credit is a tax credit of up to $2,000 available to individuals who file a tax return and owe taxes. This credit is subtracted from your tax liability, reducing the total amount of federal income tax you pay. In order to claim this credit, you will need to complete and submit IRS form 8863 with your federal tax return.
If your income is too high to allow you to claim the Lifetime Learning Credit, you may qualify for the Tuition and Fees Tax Deduction of up to $4,000. This is an “above the line” deduction, which means you do not need to itemize your deductions in order to claim it. You can find this deduction on line 34 of your 1040 or line 19 of your 1040A. The required supporting form is available online.
Additionally, student loan interest is an “above the line” tax deductible expense. If you paid any student loan interest in 2015, you may be able to claim the Student Loan Interest Deduction. You can find this deduction on line 33 of your 1040 or line 18 of your 1040A.
If you would like to learn more about tax benefits for education, you should reference the IRS publication on these benefits.