Graduating from college leads to important life changes
that can trigger significant tax benefits. The United States National Center
for Education Statistics estimated that 3.4
million college degrees were awarded in the 2011-12 school year. Many of
these recent college graduates took on new and exciting responsibilities in the
real world, like starting their first job this past tax year. And many of these
graduates may not be aware of the tax benefits available to them.
Mark Steber, Chief Tax Officer, recommends new graduates
check out these tax tips:
Deduct student loan interest – Taxpayers can claim up to $2,500 in student loan
interest paid during the year as long as they are legally obligated to repay
the loan, were at least a half-time student in a degree or certificate program
when the loan was awarded and attended an eligible institution.
Know how being claimed as a dependent by someone else can impact their
taxes –
Many college students are claimed as a dependent on their parent’s or guardian’s
tax returns. This affects eligibility for certain deductions and credits, like
student loan interest paid. Taxpayers should verify their dependent status
before filing their taxes.
Be aware that scholarships, fellowships and apprenticeships can
affect their taxes – Scholarships and fellowships are taxable if they are not paid
directly to the institution or were awarded to a non-degree candidate. Any part
of the scholarship that is used for room, board or travel is also taxable.
Generally, any payments from apprenticeships are taxed the same way as wages.
Choose withholdings – It is easy to owe taxes when taxpayers start their
first ‘real job’ because they are accustomed to having a small amount of
withholding. Any time income increases, it is important to make sure to
have enough withholding to cover the new tax liability. The IRS
Withholding Calculator helps taxpayers determine the best way to determine
withholdings.
Claim moving expenses from relocating for a new job – Taxpayers must work
full-time for 39 out of the next 52 weeks to be eligible. Keep track of
mileage, lodging expenses and tolls when relocating, as well as the cost of
moving any household goods and pets. All these relocation expenses can be tax
deductible.