Tax Information for Students
Category: College Preparation
This check list is in the following categories:
This tax information relating to those obtaining higher education.
This checklist is helpful to those who are currently enrolled in an accredited college, or would like to know how obtaining higher education could help reduce their federal taxes and/or provide a credit from the IRS.
Tax incentives for college students are being offered again in 2010, 2011, and 2012. The following information will be used to determine which education credit or deduction is best for you.
Determine who is allowed to claim the dependency exemption
A college student between age 18 and 23 years old on the last day of the year is usually claimed as a dependent if they are enrolled at least half-time in one semester, they have not lived on their own for more than half of the year, and they are not fully supporting them self. In other words, the student will pay tax on any income that exceeds their standard deduction.
The person who claims the dependency exemption is also the one who claims the education credit for a student.
Total income from employment
A student who lives with their parents (other than when they are away at school) and is under age 24, generally will not have to pay tax if they earn less than $5700.
Amount received in federal grants or financial aid.
Scholarships received
If the scholarship was sent directly to the college, the amount should be reduced from total tuition paid. If the scholarship was sent to you (the student)you will need to claim it as income.
Amount paid for tuition and fees
This is the total amount paid during the year by you or someone else, regardless of what year the education is received. Tuition paid with a loan is considered as being paid with cash.
Amount paid for books and supplies
For 2010, students will be able to include the cost of purchasing books, supplies and equipment needed for the course when figure their education tax credit. A computer and its components is only included in these expenses if it is required in order to attend the class.
Mileage (If this education is required by your employer and you travel to the school from your work.)
This expenses is partially deductible if the student can exceed their standard deduction by itemizes expenses (such as mortgage interest, real estate tax, etc.) For this reason, most young college students cannot deduct their mileage to school even if their employer requires that they take a particular course.
If a mileage deduction is likely, you will need to keep a mileage log. It must include the date and destination, purposed of travel, and total miles each day. Do not include mileage to or from your home. Only mileage to the school from your place of employment is allowed.
Parking expense (If you received a scholarship sent directly to you and not required to be used only for tuition.)
Using a scholarship for parking and other expenses, allows more out-of-pocket dollars to be used in figuring your qualifying education tax credit.
Travel mileage & parking (If education is required by your employer as a condition of employment)
The mileage traveled to school may be deductible, if you itemize. Only the miles from your place of employment to the school is deductible. Travel back home is not deductible.