Posted on Sep 14th 2022
Going to college is an exciting time. For many, it’s their first step towards independence. While being independent and making decisions for yourself can be fun, there are things you may not feel prepared for—like paying taxes for the first time.
Chances are, you’ve heard that filing taxes can be a complicated, overwhelming process. But we’re here to tell you it doesn’t have to be. In fact, as a student, there are some specific benefits you qualify for that can actually put money back in your pocket. Here are a few tips and tricks to help make the upcoming tax season as easy as possible. If you have questions or still feel overwhelmed, call the experts at Paramount Tax & Accounting today to get the guidance you need.
You first need to determine whether your parents still claim you as a dependent. If you are a full–time student and your parents provide more than half of your financial support, they can claim you on their taxes until you turn 24. If you are a part–time student but make less than $4,300 per year, your parents might also claim you as a dependent. Regardless of whether or not your parents claim you as a dependent, you may still wish to file taxes on your own.
If you work part–time, earn less than $12,550 in a year (the standard deduction), and are unmarried, you are not required to file taxes. However, you may be eligible for federal or state returns, so you still want to file taxes. Additionally, be sure to take advantage of the American Opportunity Credit, which can help cover tuition, books, and other supplies for the first four years of your postsecondary education. If your parents claim you as a dependent on their taxes, they can still take advantage of this credit.
Generally speaking, if you earn more than $12,550, you will need to file your taxes. If you are married, you will need to file if you and your spouse made a combined income of more than $25,100. If you claim another individual as a dependent (such as a child or underage sibling), you must file taxes if you made more than $18,800.
Once you know how you’ll be filing, you’ll need to collect the necessary documents. Your employer will give you your W–2 if you have a job. You may receive a 1099 from your clients if you work independently contracted positions. You’ll also want to find a copy of your 1098–T, which tracks your tuition payments. If you have student loans, you’ll also need a 1098–E. Both of these documents can typically be found on your university website and are utilized in receiving tax credits.
You will need to account for any scholarships or grants you received, especially if you used those funds to help pay for educational expenses like rent, textbooks, class fees, etc. If you’re taking advantage of the American Opportunity credit, you’ll need an 8863 form.
Once you have the required materials gathered, you may choose to file your taxes for free using various online services. However, working with a tax professional can ensure you receive the maximum available return. At Paramount Tax & Accounting, we work hard to help you file your taxes as smoothly as possible and get you the maximum return. We are also available to help you plan for a solid financial future. Whether you’re just looking to file your taxes or you’re seeking financial advice to manage student loans or plan for your future, the tax experts at Paramount Tax & Accounting can help you on your way.
Call now to schedule an appointment and learn what Paramount Tax & Accounting can do to help you and your business be successful through our bookkeeping services.