As the April 15 deadline nears for federal tax returns, students should look very closely at ways to maximize their refunds, starting with whether or not to itemize and if you’re eligible for a tax credit.
To take advantage of maximum deductions, students should file on the 1040 tax form if possible.
As Helen R. Bougere, supervisor and coordinator for Volunteer Income Tax Assistance program in Howard House, explains, the first step is to understand whether or not you should itemize. The VITA site offers tax filing assistance to both students and the community.
The standard deduction is based on the filing status of the students, whether single, married filing jointly or head of household. The standard deduction for this year’s income tax report is $5,450 for singles; $10,900 for married filing jointly; and $8,000 for heads of households.
If you have more deductions that the amount listed above, you should itemize using Form 1040. If you have less, there’s no value to itemization, so you can use Form 1040-A.
Students who file under the standard deduction are not eligible to itemize their school expenses but will be able to receive the monies taken away from state and federal taxes over the course of the previous fiscal year if the student worked, Bougere said.
Bougere recommends that “dependent” students file under that standard deduction. A student is “dependent” if parents provide more than 50 percent of support.
The personal exemption acts like a tax deduction and lowers your taxable income you pay taxes on less income. The personal exemption, which is the same for everyone, is $3,500.
Be sure to read up on available credits – for example, the Earned Income Tax Credit, or EITC, the Hope education credit and the Lifetime Learning Credit. The EITC is a refundable tax credit for low- to moderate-income working individuals and families; the refund has no effect on certain welfare benefits, such as Medicaid, Supplemental Security income, food stamps, low-incoming housing or most Temporary Assistance to Needy Families payments.
The latter two are based on educational expenses paid for you, your spouse or your dependents. Eligibility for a Hope Credit, filed on Form 8863, requires the following: 1. As of the beginning of the year, the student has not completed the first two years of postsecondary education (that is, generally is a freshman or sophomore in college). 2. Enrollment in a program that leads to a degree, certificate or other recognized educational credential for at least one academic period beginning during the year. 3. Is taking at least one-half of the normal fulltime workload for the student’s course of study for at least one academic period beginning during the calendar year.4. Does not have a federal or state felony conviction for possessing or distributing a controlled substance as of the end of the year. Other specific deductions to keep in mind include: • Line 33 of the 1040 form: Students who pay on the interest in their 2008 qualified student loans may deduct it here. If the loan is taken out for other purposes, such as a car, it is not eligible to written off on line 33.
• Line 44 on Form 8917, Tuition and Fees Deduction, where a student can write off the funds paid on tuition. All schools are required to send students W-2 form if anything was paid towards their tuition. Independent students are also eligible to itemize – write off eligible expenditures – for tuition, fees, room and board, and books and supplies. Itemize deductions are also available for medical expenses, charitable contributions, casualty and theft losses, and gambling losses. For additional information or advice, students may visit Bougere at Room 105 Howard House, call her at 816-4698 or send an e-mail to [email protected]. Help with taxes is available for students Monday through Friday from 9 a.m. to 7 p.m. They also may use the weekend hours for the general public: 9 a.m. to 3 p.m. Saturday and 10 a.m. to 2 p.m. Sunday. No appointment is necessary, Bougere said.
For more information, visit www.irs.gov.
