Ways to Save More Money

Author: Keith Huggett

I was thinking the other day about my son.  He's only two years away from starting his college education. WOW!  College expenses today are out of this world, I cringe at the thought of where they will be two years from now.  If you are a student, trying to scrape up enough money for tuition, books, and occassionally food, I have a few tips for you.

At tax time there are a few ways to save more money:

1. The American Opportunity Tax Credit or Lifetime Learning Credit may be available to you depending upon your income.  If you are one of those whose parents pay for your college education, your parents may be able to claim these credits if you are still their dependent. The IRS allows that if you are a qualified student, you can claim the maximum credit of $2500 for the first four years of your college education.  The Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students, up to $2000 per tax return.

2.Tuition and fees can also be deducted. You can can reduce the amount of your income subject to tax by up to $4,000. That equals out to maybe 1 semester's book cost.

3. Scholarships are another way to save money. If you receive a scholarship and are a qualified degree candidate, the money you receive is tax free.  However, it must be used for tuition, fees, books, supplies and equipment, otherwise anything else you use it for becomes taxable.

4. Student loans. Sounds scary right? Going into debt at the beginning of your life.  Up to $2500 of the interest you pay on student loans is tax deductible depending upon your income.

5. Work related education can save you some money also.  If you are back in school to learn something new related to your work, you may be able to deduct the amount spent on education expenses.

There are other ways available to you to keep more money in your wallet.  These usually fall under the topic of modifying your behavior.  Buy a coffee machine instead of hitting the local Starbucks.  Buy used books and electronics - they cost less than brand new versions and are often easily available. Plan your meals wisely, not everyone can afford to spend oodles on snacks at the snackbar.  Using common sense can keep more dollars in your pocket to be spent on other things of importance.

If you have any questions about education involved tax deductions, please contact us. The Tax Office, Inc. has many specialized tax professionals who can help you.