Financially, the time after graduation can be tough. Starting by yourself, looking for a job, trying to pay back money you borrowed for school can all be quite stressful when it comes to budget management. Fortunately, some tax breaks can be claimed by recent college graduates to save money.
Student loan interest deduction: borrowers earning less than $ 65,000 per year can receive a full interest deduction on a student loan. Those in the interest range of $ 65,000 to $ 80,000 are entitled to a partial deduction. A borrower earning $ 55,000 per year with loans in excess of $ 2,500 can save $ 625 per tax.
Lifetime Learning Credit: taxpayers can receive an annual credit of $ 2,000 for all qualifying expenses in their own or post-secondary education of their dependents. The credit is not reimbursable, but it matches the dollar’s expenses. Expenditure of $ 2,000 or less is reduced by the lifetime learning credit to zero. Students who graduated in May may claim a portion of their tax return costs.
The American Opportunity Tax Credit is also available to students who receive $ 2,500 in credit in the first four years of post – secondary education.
Opportunities: Graduates are eligible for a variety of tax credits and breaks which young professionals often overlook. For example, the 401(k) pension schemes that allow pre – tax contributions can reduce your tax bill or a Roth IRA that taxes but does not withdraw contributions can help your tax bills. Saving is another option for a tax credit for many graduates. Those earning less than $ 18,000 per year are eligible for a tax credit of up to $ 2,000 for their savings.
It only takes a bit of research and you can find a variety of tax credits and deductions that can help you keep your money in your pocket more. Every little bit helps, particularly if you’re fresh out of school.