Latest news with #1098-T
Yahoo
11-04-2025
- Business
- Yahoo
Tax Day Countdown: 6 Last-Minute Tax Savings Tips for College Students
With CollegeBoard reporting rising full-time undergraduate tuition rates for the 2024-2025 school year, college expenses can clearly challenge any budget. That makes it worth looking for ways to at least cut your tax bill if you haven't filed your 2024 taxes yet. For You: Try This: As a college student, you might qualify for significant education-related tax credits and deductions or even have access to tax-free funds to use for important costs. Your job situation and certain retirement accounts may also lead to tax breaks. If you are planning to file your taxes last-minute like it's an English Lit paper due the next day, here are six of the best tax savings tips for college students. If you're in an undergraduate program, the American Opportunity Tax Credit (AOTC) might cut your tax bill by up to $2,500 or provide up to a $1,000 refund. According to TurboTax, it covers money spent on tuition and expenses, like books and equipment, but not room and board. This education credit has some strict rules. You can't claim it on your tax form after your fourth year of studies, and you must take at least a half-time load for one period or more at an eligible school. Plus, to get at least a partial credit, your modified adjusted gross income (MAGI) can't be more than $90,000 if you're a single filer or $180,000 if you're a joint filer. The school should send a 1098-T form that reports the year's education expenses. The first $2,000 in education expenses can qualify for a 100% credit, and an additional $2,000 in expenses qualifies for a 25% credit. Trending Now: While the AOTC offers the bigger tax break, the Lifetime Learning Credit (LLC) is a nonrefundable alternative that could cut your tax bill by up to $2,000, or 20% of $10,000 in eligible education expenses. It's a good backup option due to its more lenient rules. While you still have to attend an eligible school for one period or more, there aren't minimum course load requirements, and the LLC is available for unlimited years. Plus, various programs and training courses qualify as long as they're for building job skills. However, the same MAGI limits apply to get at least a partial credit. If you made student loan payments in 2024, the IRS allows deducting up to $2,500 in interest paid as long as you took that loan out for legitimate educational purposes. There are a few rules to be eligible, including not being someone's dependent and not exceeding the 2024 MAGI limits of $95,000 for single filers and $195,000 for joint filers. Additionally, the deduction is gradually reduced based on your MAGI. The loan servicer will often send a 1098-E form with the interest amount. If not, check your loan statements or online loan account for this information. Whether you or your parents opened the account, you can use funds in a 529 plan or Coverdell education savings account for college expenses, like tuition and textbooks. Plus, you don't have to pay taxes to withdraw that money as long as it goes toward eligible expenses. This tax benefit makes education savings accounts a more attractive funding source than retirement accounts you might feel tempted to tap into. Just keep in mind that you'll usually need to use any remaining Coverdell account funds by age 30, per the IRS. According to the Lumina Foundation, the majority of college students also have jobs. You might have gone the self-employed route for flexibility and started freelancing, delivering meals or tutoring other students. Many business expenses related to this work are deductible on your Schedule C. Some examples could include business mileage, self-employed health insurance, equipment, home office use and even cellphone expenses. Make sure to have documentation backing up deducted expenses and avoid writing off any non-business portions. If it's your first time filing a self-employed return, working with a tax professional may be wise. To both potentially save on taxes and make progress toward building wealth early, consider contributing to available tax-advantaged retirement accounts as a college student. While pretax money put into a traditional 401(k) simply lowers your taxable income, traditional IRA contributions are deductible up to the IRS limits based on your filing status, MAGI and any employer plan coverage. Roth IRA contributions involve after-tax funds and won't reduce your 2024 tax bill, though future tax-free withdrawals are possible. If you weren't a full-time student for at least five months during the year, you might also qualify for the Saver's Credit. It's worth up to $1,000 for a single filers and $2,000 for joint filers. Caitlyn Moorhead contributed to the reporting for this article. More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for Retirees4 Affordable Car Brands You Won't Regret Buying in 20257 Overpriced Grocery Items Frugal People Should Quit Buying in 2025How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on Tax Day Countdown: 6 Last-Minute Tax Savings Tips for College Students Sign in to access your portfolio
Yahoo
07-04-2025
- Business
- Yahoo
Taxable vs. tax-free scholarships: Key features
Typically, scholarship funds are not taxable if spent on specific school-related expenses, like tuition, fees and supplies. If you use the money differently – such as for room and board or travel– you may be liable for taxes on that portion of the scholarship. Keep an eye out for a W-2 or 1098-T form from your school at the beginning of the year. These documents will help you report scholarship income accurately on your tax return. In addition to scholarship money, it's beneficial to look into other education-related tax credits and deductions. You may be eligible to save more. Earning a scholarship is a significant achievement and one of the best ways to lower the cost of college. Most scholarships are not considered taxable income, so free money shouldn't affect you during tax season, especially if you use it for direct educational costs such as tuition, fees, textbooks or required supplies. Be aware that using scholarship funds that are outside these educational costs may be considered taxable. The IRS defines qualified education expenses as those necessary to pay for your enrolled classes. If you have doubts about what qualifies as a nontaxable use, you may consult your scholarship grantor or your college or university's financial aid office for clarification. Learn more: The 5 best scholarships for college students Whether or not scholarship money is considered taxable income is based on how you use the funds. According to the Federal Student Aid Department at the U.S. Department of Education, you may need to report federal grants as income for tax purposes. 'Generally, any amount of scholarship or grant aid received that exceeds the cost of tuition, required fees, and required course materials, may be taxable,' stresses financial aid director Pam Sitting at Grinnell College. For example, if a student receives $30,000 in scholarship money and only uses $25,000 for qualified education expenses, the remaining $5,000 may be taxable since it was used for outside expenses such as housing or food. A tool on the IRS website can help you assess whether your grant funding may be taxable, but consulting a financial advisor may be best for accuracy. To avoid paying taxes on a scholarship, you must be: Actively earning a degree and regularly attending classes. Attending an educational institution that has a regular faculty and curriculum. Attending an educational institution that has a regularly enrolled body of students in attendance. Using the scholarship money for qualified education expenses. If you do not fall into these categories, your scholarship may be taxable. If the money is considered payment for services required for receiving the fellowship, then the scholarship or grant would also be considered taxable. Exceptions Any payment received for teaching, conducting research or providing other services under an eligible student work learning-service program, such as the National Health Service Corps Scholarship Program and the Armed Forces Health Professions Scholarship and Financial Assistance Program are not taxable. If you're reporting a taxable scholarship — because you received payment for services or because you used the money for a nonqualified expense — you'll typically receive a W-2 form. You'll then report the amount listed as taxable income on line 1a of Form 1040. Even if you don't receive a W-2, you should still report this income on your taxes. If you don't have this document, you'll enter 'SCH' and the taxable amount on line 8 of the 1040 form. You will also want to attach and submit the Schedule 1 form with your 1040 and other tax documents. Scholarship funds tend to be taxable if you fail to meet the conditions for a tax-free scholarship listed above. Your enrollment status, institution, or how you spend the funds can impact the taxability of your scholarship money. Taxable stipends are similar to other scholarships and grants. A key difference is that if you receive a stipend for living expenses or in exchange for duties performed (clerical work or research), this income will likely be considered taxable. If you receive a W-2 form for your stipend, you'll know the income is taxable. Otherwise, you'll also likely receive a stipend letter from your school with information related to its taxability. College students have access to special tax credits and deductions while they're in school or paying off loans. Here's what you need to know about each program: Students can claim an annual maximum credit of $2,500 for the first four years of college if they meet the requirements. To get the full credit, they must have a modified adjusted gross income (MAGI) of $80,000 or less ($160,000 or less if married filing jointly). Credits are phased out for MAGIs of $80,000 to $90,000 ($160,000 to $180,000 for joint filers). This credit allows students to claim 20 percent of the first $10,000 of qualified education expenses per year (with a maximum credit of $2,000). This can apply to students of all levels; undergraduate, graduate and professional degrees can qualify with no time restriction. To receive the full credit, borrowers' MAGI must be below $80,000 for single filers and $160,000 for married filing jointly. The amount is phased out for borrowers with a MAGI between $80,000 and $90,000 ($160,000 and $180,000 for joint filers). Students who used student loans to pay for school-related expenses may be eligible to deduct up to $2,500 in student loan interest paid during the previous year. To get the maximum amount, borrowers must have a MAGI below $80,000 for single filers and $165,000 for married filing jointly. Amounts are phased out for borrowers with a MAGI between $80,000 and $95,000 ($165,000 and $195,000 for joint filers). As long as you use scholarships for their intended purpose of tuition, school fees or textbooks at a legitimate educational institution, scholarships are not taxed. You might run into situations of your scholarship turning into taxable income if you use it for other purposes like rent, or if your status as a degree candidate changes. The IRS has provided an interactive tool online that helps students determine whether or not their scholarship money is taxable. Regardless of whether you pay taxes on scholarship money received, you might also look into education tax credits or deductions to help you save. What happens if you don't report scholarships on your taxes? If your scholarship was used toward qualifying expenses only, there is no need to report the award on your tax return. However, if you determine you've spent any portion of the award on taxable expenses and already filed your taxes, you'll want to consult a tax professional about amending your return. Do scholarship recipients receive a 1099? Some scholarship recipients will receive a 1099; some will not– scholarship grantors are not required to report the tax-free portion of their award. Colleges are, however, must report scholarships on the 1098-T form. What happens if my scholarships are more than my tuition? Scholarships are factored into your overall financial aid package, so you must report any awards to your institution's financial aid office. The scholarship income may impact your overall financial aid, including student loans. Check with your scholarship provider if you've received more money than you need to pay for direct school costs. They may have specific requirements if your aid exceeds what you need. Why did I receive a 1098-T form from my school? A 1098-T form is a tuition statement and should be filed for every enrolled student for whom a tax-reportable transaction is made. 'Remember, taxable financial aid calculations are based on the tax year and not the academic year,' says Sittig. 'The Form 1098-T provided by a college may or may not have all the information needed to calculate taxable financial aid. It is a good idea to review your billing statements for the tax year and do the calculations yourself or with the help of a tax preparer.'
Yahoo
27-03-2025
- Yahoo
Over 150 fake documents, items seized during traffic stop in far East El Paso
EL PASO, Texas (KTSM) — A 42-year-old man has been arrested after authorities found over 150 counterfeit documents and instruments in his vehicle, according to the El Paso County Sheriff's Office on Wednesday afternoon, March 26. The Sheriff's Office said Richard Allen Jenkins, 42, was arrested and charged with more than 50 counts of fraudulent use/possession of identifying information. In addition, he was also charged with theft of mail and forgery of a financial instrument. Jenkins was booked into the El Paso County Detention Facility with a $45,000 bond, the Sheriff's Office added. The Sheriff's Office said that on Tuesday, March 25, a deputy conducted a traffic stop at the 12800 block of Thackery Drive in far East El Paso. During the traffic stop, the deputy 'developed a probable cause to search the vehicle' and found several forged driver's licenses, identification cards, and over 150 counterfeit documents and instruments in Jenkin's vehicle, according to the Sheriff's Office. The following items were seized from Jenkins' vehicle, according to the Sheriff's Office: 39 forged Driver's Licenses 16 blank, print-ready ID cards Four Social Security cards 10 W-2 forms Four 1099-NEC forms Two 1095-C employer health insurance forms Two 1098-T forms One 1099-R form 18 forged checks 25 check copies 12 blank check backgrounds One blank checkbook One signature stamp One bill of sale valued at $69,900 One laptop with forging software One printer for IDs and forged checks Five USB drives Two cellphones Eight credit cards Four debit cards 10 pieces of mail belonging to other individuals 12 sets of stolen account/Social Security numbers 22 mail padlock shims 47 mail and skeleton keys One USPS mailbox Two fraudulent U.S. passports (One underage, one deceased) According to the Sheriff's Office, detectives with the East Montana Patrol Station have reached out to all identified victims, many of whom have reported mail theft incidents. Most victims resided in apartment complexes, and several reported fraudulent credit cards had been activated in their names, according to the Sheriff's Office. The East Montana Patrol Station has partnered with the U.S. Postal Inspector and additional state and federal charges are pending, according to the Sheriff's department. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
