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Tax Tips for Students

September 28, 2021

Unless you work or aspire to work in the tax field yourself, if you're like most people, taxes are not your favorite topic to think about. However, there's a reason for the saying that the only two certain things in life are death and taxes. You can't really get away from taxes, even as a student, no matter how much you dislike them. Your best bet is to make peace with the process, which really is relatively straightforward for most people in your situation.

Why You Should File

Technically, not everyone has to file. If your income was below a certain amount and taxes were withheld from your pay, you might not be required to do so. However, you could be handing over a not-insignificant amount of money to the government. You won't get a refund if you don't file, so it's worth taking a little bit of time to do so. Believe it or not, it used to be a far more onerous process before you could file online. Filing electronically makes it easier than ever. There are several different kinds of programs that are free if you make below a certain amount, and they will walk you through the process and ask you the relevant questions. You can also check with a tax professional, or there may be free volunteer help in your area.

Talk to Your Parents

You should talk to your parents about whether or not they are claiming you as a dependent on their taxes. This may be affected by your age, whether or not you are a full-time student, and how much money you make each year. Tax rules can change from year to year, so when you are managing your taxes make sure that you have the most up-to-date information.

Loans, Stipends and Tax Credits

Student loans can be an excellent way to fund both your undergraduate and your graduate degree. If you stand out from others by being in a graduate program, there's a good chance you were offered a fellowship or a stipend, but this might not be sufficient to cover your costs. If this is the case, you can take out a student loan from a private lender to help cover some of the additional expenses. If you have started paying off loans while still in school, you might be able to deduct interest payments. If you're not in school full time or you're a graduate student, you might qualify for the lifetime earning credit. Your stipend may or may not be taxable depending on whether you did work in exchange for it and how you used it.

Ask For Help

Don't be afraid to ask for help, whether that's from volunteers, your parents, a professional or even the Internal Revenue Service. Although people often imagine that talking to the IRS is a scary experience, they usually tend to be friendly and helpful. If you fail to file a return that you are required to file, there could be penalties and interest to pay, but even if you fall behind, it's best to try to talk with the agency and figure out how to best move forward.


Tags: tax | Education



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