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Top 6 Best Tax Tips for Online Education

Aug 17, 2007
Just like many facets of life, you can save money and earn money back on your online education by utilizing these tax tips:

1. File even if you made too little last year; many don't realize that if you've had ANY money withheld from pay checks, you have a refund coming. If you don't file, you'll never get that refund, so file even when you didn't make enough to compel you to file.

For 2006 tax returns and those under 65 years of age:

If you are a single filer and made $8,450 or more in 2006, you need to file.

If you are a head-of-household and made $10,850 or more in 2006, you need to file.

If you and your spouse file jointly and you're both under 65, if you made $16,900 or more in 2006, you need to file.

If you're over 65, the amounts are as follows -

$9,700 for single filers.

$12,100 for head of household filers.

$17,900 for married couples filing jointly where one spouse is 65+ years old.

$18,900 for married couples filing jointly where both spouses are 65+ years old.

2. There are three main ways to save money, but you are only eligible for one of them, so you need to choose the one that best fits your specific situation.

a. Hope Scholarship Credit - It's a non-refundable tax credit, not a scholarship. If you are eligible, you can claim up to $1,500 for qualified tuition and related educational expenses. However, you must file a federal tax return to receive this credit.

Essentially, qualifications include

- being enrolled in a program leading to a degree, certificate, or other recognized educational credential; - being enrolled at least part-time for at least one academic period beginning during the year; - being applicable for a student's first two years; - the student not having a felony drug conviction on his/her record.

b. Lifetime Learning Credit - Broader in scope than the Hope Scholarship Credit, if you are eligible, you may be able to claim a credit of up to a maximum of $2,000 for qualified educational expenses.

Essentially, qualifications include

- being applicable to all years of postsecondary education and to acquire or improve job skills; - being applicable for full-time, part-time, or less than part-time students; - being applicable for an unlimited number of years; - being applicable for one (or more) educational courses; - being applicable to even those who have been convicted of a federal or state felony drug offense.

c. Student Loan Interest Deduction - Unlike the other two options, this deduces the interest on your federal or private loans. The maximum deductible interest on a qualified student loan is $2,500. The amount you are allowed to deduct is based upon your filing status and your modified adjusted gross income (MAGI.)

You can find out more information about all three at http://www.irs.gov.

3. Don't wait until the last minute to figure out your taxes; start early and save on the stress.

You can go online to download the state and federal forms you'll need - do this early to get an idea of what issues may apply to your return.

On top of that, if you need help (and many people use certified tax accountants to help prepare their taxes,) it's easier to get that help sooner rather than later because many people wait until the last minute to do their taxes, so the tax accountants are often booked solid.

Additionally, tax accountants will be under more pressure as the April 15 deadline approaches, so you might be able to get more answers to your questions if you go to him/her earlier rather than later.

You can also utilize the IRS' knowledge of preparing your tax returns by calling 1-800-829-1040. The call is toll-free. You may be transferred several times during the call - make sure to write down each person's name and identification number for future reference later.

You can also see if an Internal Revenue Service volunteer Income Tax Assistance site is in your community if you need in-person assistance in filing your taxes.

4. Give yourself a weekend to work on your return.

No, this doesn't mean it will take you a whole weekend to do your taxes, BUT the extended period without work or school will allow you to take needed breaks when you get tired and still allow you to double-check those numbers before you mail or e-file that return.

In fact, many suggest you take two weekends and the week in between to make sure your tax returns are correct. Take the first weekend to do your returns in a leisurely fashion, then take the next week to seek any outside help and ask any questions you have, then take that second weekend to check the numbers again and mail or e-file that return.

5. Practice on paper.

Even if you e-file your returns, it might be prudent to practice on paper first because you can see the entire one side of the paper and all pertinent information. Online, you can only see so much of the tax form if you have the magnification in your PDF viewer too high, thereby making it more likely to miss errors and make mistakes.

After you have figured everything out on paper, it's very easy to just type in the correct numbers in the correct spaces and then e-file it.

6. Make sure to make a copy of all forms before mailing or e-filing them.

To be on the safe side, you should ALWAYS have a copy of all of the forms of your tax return in the event that there is a dispute over them at some point in the future. That way, you don't have to rely on someone else providing that information for you.

Utilize these tips and you will likely complete your tax returns on time correctly with less stress and have better chances of earning greater tax returns.
About the Author
Bryan Wong is the owner of http://www.OneStopEducationSearch.com, a website that provides you a unique one-stop-search-service and high quality articles. Visit our gift shop and get an e-book on Time Management just for stopping by.
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