The Top 10 Things for 18-25 Year-olds to Know About Taxes
As exciting as living on your own for the first time is, it can be equally intimidating and overwhelming. For every night with a wild, too-crazy-to-blog-about activity, there are an equal number of new (and incredibly less sexy) responsibilities of paying bills and, yes, filing taxes. And just like that growing pile of dishes in your sink, ignoring your taxes only makes them more daunting when you finally get around to doing them.
I’m new to the TurboTax team and not all that removed from being a first time tax-filer myself, so I figured, why not throw a proverbial bone to those twenty-somethings who will be leading the world in the not too distant future? I know I could have used some help when I was trying to figure out how to get the most money back from the government: when I wasn’t quite ready to itemize every single expenditure, but knew my situation was a little more complex than a 1040EZ. So, without further delay, here are the top 10 things every person from the age of 18-25 should know about taxes. Sit back, crank-up that really awesome underground band that only you know about and love mentioning at parties, and forget about the mold growing under you sink. Get ready to have some fun (yes, I did use the word FUN in a tax blog) and get ready to find out how to make your youth work for you. These aren’t your parents’ taxes…
1) Education Credits
Are you working and going to school? If so, good for you. You may be able to reduce your taxable income by some, or even all, of your education expenses. If you’re in the first two years of an undergraduate degree and your total income is under $58,000, you qualify for a Hope Credit worth up to $1800.
For those of you that are past the two year mark in college, don’t despair—you can get a Lifetime Learning Credit of 20% of your expenses up to $2000 (if your income is under $58,000) or up to a $4000 tuition deduction if your income is under $80,000. Pretty sweet, huh? And here’s the best part—TurboTax will figure out which option is best for you (I know…shameless plug).
Stay tuned for more tips. I’ll be posting about three a week for the next few weeks. Here’s a little teaser…not all of them have to do with education.