An Education in Student Savings – 10 Common Tax Deductions and Savings for Students

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There never seems to be enough money, especially if you are a college student strapped for funds. It’s no wonder, with the high cost of tuition and books and housing and dwindling funds available from scholarships, grants and loans. But don’t despair – here are ten ways that college students can make ends meet (and even have some fun doing it).

Let’s start with tax deductions and benefits:

 

  1. Education tax credits. If you pay for college or trade school costs, you may be able to claim the American Opportunity Tax Credit or the Lifetime Learning Credit for those expenses,  as long as your income is under certain amounts. If your parents pay for college costs, they may be able claim the education credit on their tax return as long as they claim you as a dependent.
  2. Scholarships and fellowships. If you are lucky enough to receive a scholarship or are paid a stipend for a fellowship, it will be tax-free if you are a degree candidate. But wait – you must use the funds to pay for tuition, fees, books, supplies and equipment. Use the money for anything else and you will pay tax on it.
  3. Student loan interest. Up to $2500 of the interest you pay on student loans is tax deductible, even if you don’t itemize deductions, as long as your income is under $80,000 if you are single and $160,000 if you are married filing jointly.
  4. Work-Related Education. If you are returning to school to maintain or improve your job skills, you may be able to claim an itemized deduction for the expenses you pay. But you get no deduction for the costs of education needed to meet the minimum requirements of your job or to qualify for a new career.

Now for some expense-busting tips:

5.  Buy used textbooks if you can. Use online textbook comparison sites to shop for the best prices. When you are done with the course, sell your used textbooks online. Buying electronic versions of textbooks rather than old-fashioned paper versions is another way to save.

6. Look for student discounts. If the retailer or service provider doesn’t advertise a student discount, ask. The worst they can do is say no, and you may be able to snag a discount that isn’t widely advertised.

7. Splurge on a good coffee maker – and use it. It’s expensive to buy lattes at your local coffee house. Tuck a thermos full of coffee into your backpack and use it to refill your to-go cup. If you do this stealthily enough, no one will even peg you for a geek.

8. Stock up on snack foods. Busy college students are pressed for time and need to eat on the go a lot, but crackers, string cheese, cookies and sweet rolls from home are much cheaper than buying them in coffee shops, and they are just as portable.

9. Buy used if possible. Shop for refurbished computers and other electronics online and you’ll get much more for your money. It may be last month’s model, but it will still be functional. Remember, everything you own is used once you buy it,  so why not start there and save some bucks?

10. Free entertainment is, well, free. Watch television online, gather with friends at free movie screenings on campus, join in a game of touch football or tennis, or go for a swim at the Y. Get creative, get moving, and get involved. There are lots of ways to entertain yourself and your date on the cheap.

TurboTax will help you get all of these tax deductions and credits and more so that you can keep more of your hard-earned money and you may be able to file for free with TurboTax Federal Free Edition.

 

 

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