by Caleb Fort
Daily Lobo
Filling out a tax return might be less fun than taking a midterm.
But taking a midterm doesn't save students money.
College students can get money back from taxes by taking advantage of educational credits and deductions, said Liz Kennedy, a spokeswoman for Sallie Mae, a student loan company.
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"Taxes can be very confusing," she said. "A lot of college students are filling out taxes for their first time, or close to it, and they're not thinking about looking for ways to save money. The onus is on the taxpayer to educate themselves."
In 2006, 9 million people who filed taxes claimed an educational deduction or credit and saved an average of $668, she said.
About 27 percent of taxpayers who are eligible for the deductions do not claim them, she said.
"By putting in a little bit of extra effort, you can get a good amount of extra money," she said.
There are two deductions and two credits for college expenses.
A deduction reduces how much income is taxable. A credit counts against the final amount of taxes due.
Tuition and fees deduction
This deduction is based on how much a student spent on tuition and fees. The deduction is up to $4,000 per year.
The 1098-T form, which is sent out by universities, lists how much a student paid for school. Tuition and fees paid for by scholarships do not count for this deduction.
Money paid for housing is also not eligible.
The maximum income for single taxpayers to qualify for the deduction is $65,000.
"Maybe there are some students who are making that kind of money," she said. "But I sure didn't know any when I was in college."
Student loan interest
deduction
This deduction applies to students who are paying interest on a student loan. The deduction is good for up to $2,500 per year.
The 1098-E form shows how much interest a student has paid. The deduction does not count for payments toward the principle of the loan.
The maximum income for single taxpayers to qualify is $50,000
per year.
Hope Scholarship tax credit
This credit is determined by how much a student has spent on tuition and fees. The credit is good for up to $1,650.
The first $1,100 qualifies for a 100 percent credit - every dollar spent on education will be given back in the credit. The second $1,100 is a 50 percent credit.
Only freshmen and sophomores can claim the credit, and it can be claimed only twice per student.
Students cannot combine this credit with the tuition and fees
deduction.
Lifetime Learning tax credit
This credit counts for any money spent on tuition and fees, including undergraduate, graduate and vocational schools. Students do not have to be working toward a degree.
The credit is 20 percent of up to $10,000 spent on education per year. There is no limit on how many times someone can claim
the credit.
However, it is better to claim the Hope Scholarship if possible, Kennedy said.
How to choose
There is no easy way to know which of the deductions or credits to claim, Kennedy said.
"You just have to sit down and figure out what you qualify for, and which will save you the most money," she said.
Accountants and tax software can help figure out which credits and deductions students should apply for.
"It might be a good idea for some people, but I wouldn't say it's necessary," she said. "It just depends on how comfortable you are working with your taxes."
The Tax Law Club offers free help with taxes from 9 a.m. to 1 p.m. on Mondays and 3 to 8 p.m. on Wednesdays in Room 2424 of the law school.
It's important to be organized while doing taxes, Kennedy said.
"My advice to someone who's doing taxes is just to get all your forms in order," she said. "There are a lot, but if you have all of them before you sit down to do your taxes, everything will be a lot less confusing."
