Start your tax planning early!
As a busy student, it is easy to put thinking about taxes until it is time to file. This could cost you, though. You can not do much about lowering your tax bill when you prepare your return.
To ensure that you do not pay more tax than you need to, make sure to plan ahead.
Some tax areas that can affect you while you are in college are: dependency problems, education credits, exclusions and deductions, multiple tax obligations of the state, and the mandates of new 'insurance
Here. tax planning strategies for students 4:
1. Understand your dependency exemption
If your parents are paying more than 50% of your expenses, and you are under age 24 at the end of the year, they usually can claim you as a dependent on their taxes. This means that even if you file your own taxes, you can not claim your own exemption (up to $ 3.00).
If you are close to the line of 50%, you may want to spend more of your own money on your own expenses so you can take your own exemption amount.
on the other hand, if your parents are in a much higher tax bracket, it might be smart to let cross the 50% mark so they can make the exemption. They will get more benefits of it
Note that you can make as much money as you want and still have your parents pay more than 50% of your support -. Food, housing, clothing, education, medical and dental care, recreation, transportation, and other necessities.
The money you earn and put in the savings do not count as support.
2. tax breaks for education
The IRS offers several tax breaks for education. These are the most common:
American Opportunity Credit, formerly Hope Credit
Try this first credit. It pays to essentially the first installment of $ 2,000 you spend on tuition, fees, books, supplies and equipment. If you qualify, it also gives you 25% of the next $ 2,000 in credit for a total credit of up to $ 2,500.
Unlike the Hope credit, the American Opportunity credit is good for four years of undergraduate study.
Lifetime Learning Credit
If you do not qualify for the American opportunity credit, the Lifetime Learning credit is the best thing. It gives you a tax credit equal to 20% of tuition and certain related expenses up to $ 10,000. The maximum credit is $ 2,000.
Tuition and fees deduction
The next choice is a deduction of up to $ 4,000. He is regarded as an adjustment to income, meaning that you can take this deduction even if you do not itemize your deductions.
Try to time your tuition to get the maximum benefit from these breaks. You can take the credit or deduction for tuition you paid for academic periods that begin during the tax year or during the first three months of the following year.
3. Tax Plan in several States
If you work in more than one state - for example, if you live in one state and go to school in another - . You may need to file more of declaration of a state income
You do not have to worry about no tax on income states :. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming
You also do not have to worry about paying income tax twice on the same income. tax state laws vary widely, but generally you only pay the state taxes on the same income once.
4. Avoid penalties for not carrying health insurance
If you do not have health insurance in 2014, you might have to pay a $ 95 per person or penalty 1% of your annual income, whichever is greater.
you do not have to worry about it if you are not without health insurance for more than three months, or if your income is low enough that you need not file a tax return.
you are exempt from this law if you are a member of certain religious groups or sharing recognized health ministry, members of a tribe federally recognized, and people in to other special situations.
you also will not be penalized if your premiums cost more than 8% of your family income.
You can obtain insurance through the health insurance market, also known as exchanges. Your state may have its own market, use of the health insurance market from the federal government, or offer a hybrid of the two.
You might be able to get a tax credit to help pay for your insurance. HealthcareACT.com of tax credit calculator can help you see if you may qualify.
If you're lucky enough to have parents with health insurance, you may be able to stay on their insurance plan until you turn 26. Your insurance company Parents will usually charge for this coverage your parents.
Be sure to compare the cost of the amount you would pay after all credit and subsidies on the exchange before you decide where to get insurance.
you expect to stay on the health insurance policy of your parents as long as possible
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