Kentucky Higher Education Assistance Authority
December Money Tip for Students
Income tax season is fast approaching, and students may want to consider these tips from the Kentucky Higher Education Assistance Authority (KHEAA) to help the process go more smoothly.
Although you may not have earned enough to be required to file, you may get a refund if your employer withheld taxes from your pay. But before you file, discuss the tax situation with your parents. Depending on how much they contributed to your upkeep during the year, they may be able to claim you as a deduction on their tax returns, which could save them thousands of dollars.
Students and their parents may be able to take advantage of these deductions or income adjustments on their federal taxes:
· American Opportunity Credit, available for the first 4 years of college.
· Lifetime Learning Credit, available if a taxpayer or a dependent is taking college courses to acquire or improve job skills.
· Tuition and fees deduction, which lets taxpayers deduct qualified education expenses paid during the year for themselves or a dependent. The expenses must be for college.
· Student loan interest deduction, which lets people deduct up to $2,500 per year on federal taxes for interest paid on federal student loans.
For more detailed information about federal programs, go to www.irs.gov to download the free Publication 970 Tax Benefits for Education.
Kentucky also offers a tuition tax credit for undergraduate studies at colleges and universities in the state.
Remember that tax rules may change from year to year, so make sure you have the most up-to-date information before filing.
To learn how to plan and prepare for higher education, go to www.gotocollege.ky.gov. For more information about Kentucky scholarships and grants, visit www.kheaa.com; write KHEAA, P.O. Box 798, Frankfort, KY 40602-0798; or call (800) 928-8926, ext. 6-7372.