Taxes can be a snooze fest topic to discuss but for us it’s not because we desire to grow and be more financially literate.
As you may know this is “Tax Month” and “Tax Day” is quickly approaching, April 15. This is the deadline when you must file your takes on all income earned during the previous calendar year.
If you are a single person, you only are required to file taxes if you make move than $12,200 during the year. If you made less but had income taxes withheld throughout the year, you will likely qualify for a tax refund and might want to file anyway to get your money back.
Taxes can seem scary, but the best way to avoid any unnecessary stress regarding taxes is to plan and become informed.
According to the Internal Revenue Service (IRS), scholarships, fellowships, and grants, including financial aid, are tax free only to a certain extent. To determine what qualifies as tax free, you must understand the difference between qualified and non-qualified education expenses. Here are some examples:
Qualified Education Expenses:
- Tuition and fees required to enroll at an eligible educational institution.
- Course related expenses, such as fees, books, supplies, and equipment that are required for the courses.
Non-qualified Education Expenses:
- Room and board
- Health insurance
- Research
- Travel
It is important to remember that if any part of your scholarship, fellowship, or grant goes toward non-qualified education expenses, you will have to file a tax return according to the IRS. Your scholarship is viewed as individual income under the federal government if it is not purposely used for a qualified educational expense.
Here are some relevant forms to file your education-related taxes:
1098-T: Tallies expenses paid to the college or university
1098-e: Summarizes student loan interest payments
If you are paying back federal student loans, you may qualify for up to a $2,500 tax deduction based on the student loan interest you have paid. You may use the 1098-e to file for that deduction.
Of course, this does not have everything concerning taxes mentioned. However, as a student this information is golden. Again, I hope this information is beneficial for you. Get those taxes completed if you haven’t and get yo money! Who knows you could add to your savings or pay off credit debt? Let’s Build.
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