Author: Ryan Hirsch, NASBA Multimedia & Video Services Manager
Tax season is officially here, and students with busy schedules may opt to skip the chore of filing federal tax returns. However, the tax filing process is now simpler than ever, and these students are likely passing up free money by not taking advantage of federal tax exemptions and IRS credit programs.
The first way students can earn cash back is through "Federal Income Taxes Withheld". Employers often withhold and overestimate the amount of federal income taxes that are deducted from their employees' wages. By filing tax returns, a portion of this money will likely be refunded to those employees who claim this income.
Moreover, students who work during the year, but receive low wages may also qualify for the Earned Income Tax Credit (EITC). This credit reduces the amount of taxes owed to the government based on a person's level of income, marital filing status, number of children and a variety of other factors.
The IRS also provides money-saving benefits specifically designed to assist taxpayers who are enrolled in educational courses. Students, parents of students and spouses of students are eligible to participate in the American Opportunity and Lifetime Learning credit programs. These programs are designed to help offset the cost of tuition and fees, books and other items deemed necessary to complete educational courses. Below are summaries of these two credit programs:
The American Opportunity Credit Summary
The Lifetime Learning Credit Summary
In order to figure out if you qualify for these programs and exemptions, gather all important financial documents such as W-2's and 1099's, determine the appropriate filing status and check each program's eligibility requirements. Tax returns can then be filed online for free by using the IRS' new FreeFile program, which allows single or joint tax filers with combined incomes of less than $57,000 to file their taxes electronically. Watch the video below to take the first step towards filing taxes quickly, easily and cost effectively.
Note: The information provided in this article is intended to provide a summary of available tax options. Please consult the IRS website for official rules, laws, exemptions and eligibility requirements for each credit program before filing tax returns.
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