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FAME's 5 on the 5th 
February 2014 
It's Tax Season - 5 Timely Tips for College Students and Graduates

 

This information is not intended as individual tax advice to any person and is provided as general information in connection with FAME's mission to provide financial education to Maine citizens. Please seek professional advice based on your particular circumstances from an independent tax advisor. 

 

Filing a tax return is a new and stressful experience for many college students and graduates. Here are some tips to ease the pressure: 

 

1. File! Even if you don't have to. 

 

Even if your income is below the amount required to file a tax return, it still may pay to file. Consider filing if money was withheld from your pay, or if you qualify for a tax credit. Even a $50 tax refund helps buy a textbook or fill your car's gas tank.

 

2. Give yourself enough time.  

 

Since you generally file tax returns only once a year, doing it right can be time-consuming. Set aside a few hours to do it right. Make sure you understand every question.

3. Understand your family's situation.  

 

Figuring out how to claim a student for tax purposes is important. Students and parents should discuss whether or not the student should file as a dependent, or independently. Not clearly establishing the student's dependency status can lead to possible filing errors. Learn more at: www.irs.gov

4. Learn about education tax credits and deductions.  

 

Both the federal government and the state of Maine offer tax credits and deductions. You or your parents may be eligible for them. A credit reduces the tax owed. A deduction reduces your amount of taxable income.

The American Opportunity Tax Credit. This federal tax credit is up to $2,500 per student. It is available for the first four years of post-secondary education. To receive it you need to show you paid for qualified education expenses. Be sure to keep your receipts. There is a maximum income limit for this tax credit. 

Lifetime Learning Credit. You may be able to claim up to $2,000 for qualified education expenses on your federal tax return with this credit. The number of years you can claim this credit is unlimited for eligible students. 

A parent or student can only claim one of the above credits for the same student.

Opportunity Maine. If you earned an associate or bachelor's degree at an eligible Maine post-secondary school - and continued to live and work in Maine after graduation - you may be eligible for an Educational Opportunity Tax Credit on your Maine income tax return. 

Student Loan Interest Deduction. You may be able to deduct interest you paid on a qualified student loan, reducing your federal taxable income up to $2,500. This deduction has an income limit. 

Tuition and Fees Deduction. You or your parents may be able to deduct qualified education expenses on your federal tax return. This may reduce taxable income up to $4,000. 

Determining which credits and deductions you may qualify for can be challenging. Ask an expert if you need help.

5. Need help? Assistance is available and may be free.  

 

The following resources offer free tax help to those who qualify: 
  • CA$H Maine offers no-cost tax preparation and connects you to free and low-cost resources to help you save money. Available for households earning $52,000 or less in 2013. 

 

Finance Authority of Maine
www.famemaine.com
 
Tel:      (207) 623-3263
           (800) 228-3734
Fax:     (207) 623-0095
TTY:    (207) 626-2717