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Miami Herald
6 days ago
- Business
- Miami Herald
What is contributing to rising college costs?
Higher education tuition has doubled in the last 20 years, with some institutions today hitting the $100,000 mark for a four-year degree. These escalating costs have discouraged many prospective students from taking the leap into academia, as well as those experiencing waves of ballooning debt. However, it's not only students who feel the pinch. As costs rise, higher education institutions and communities feel it, too. The prospect of federal funding cuts adds another layer of uncertainty to an already complex situation. If institutions lose funding, the bulk of the burden falls on families, limiting the prospective student pool even more. Below, Watermark Insights outlines some of the key factors contributing to rising college costs. The rising cost of college - a look at the numbers Today's U.S. students can expect to pay an average of $30,884 for tuition, fees, and accommodation over a four-year degree. However, many numbers are above this average. College tuition and fees rose 4.7 percent from 2020 to 2023 alone, and they continue to rise with every passing year, leaving students struggling to keep up. While tuition trends vary considerably between programs and student income, the fact remains that prices are significantly higher. Students are also shifting to more expensive programs and institutions, compounding the effect of these costs. Postsecondary institutions have an average increase in college tuition per year of 5.87 percent, which means there has been a 48.9 percent increase between 2009 and 2023. Even accounting for inflation, higher education is rapidly becoming a life-changing financial decision. To fuel the fire, Congress is advancing a budget bill that could impact federal funding programs that support students and institutions. It also aims to introduce tax updates that make it more expensive for students to pursue higher education, rendering it more challenging for institutions to sustain their missions. More proposals are under discussion, which could repeal the tax exemption for scholarships and fellowships and eliminate the American Opportunity Tax Credit. Both of these options alleviate the burden on students and their families. Why is college tuition so high? The rise in higher education costs involves a convergence of factors, including: Administrative bloat Some higher education institutions have more administrators and managers than undergraduate students. U.S. higher education institutions increased administrative staff by 164 percent between 1976 and 2018, and numbers continue to rise. As institutions offer increasingly broad student support, growth in administrative and nonteaching hires is steady. Administrative bloat is a broad term, however, and many of the additional hires fill legitimate institutional needs. The average student profile is changing, and nearly 75 percent of college students are nontraditional. Investments in student success are essential for institutions to fulfill their missions, and many student groups today need more support than their peers of yesteryear. Decreased state and federal funding State and federal government funding is the lifeblood of many institutions, but the amount they receive has become more uncertain. Even before the recent political shift, 32 states spent less on higher education institutions in 2020 than in 2008. In January 2025, the Office of Management and Budget issued a memorandum pausing federal grants. While the pause only lasted two days, it highlighted the potential for change in the coming years. Since then, there's been a whirlwind of change in the funding department. Many higher education institutions remain confused about what will happen next. With the cost of education already the biggest barrier for students, shifting the financial burden has far-reaching implications for higher education. Federal funding cuts can potentially create significant financial shortfalls in institutional budgets. That means students face increased tuition and fees for services once covered by federal funding. Demand for services and resources When many students think of higher education, the complete experience comes to mind. They expect sports, full dorms, contented faculty, cutting-edge research, and buildings filled with classrooms. Many students get exactly that, but it comes at a cost. The complete college experience means maintaining buildings, housing, feeding students, and competitive packages for the increasing number of staff needed to maintain these massive facilities. In addition, institutions must keep up with the blistering pace of technology. Every year, they need updated equipment and software to stay current. They invest more in retention and student support to see students from diverse backgrounds through degree completion. Higher education institutions are under mounting pressure to attract students. Students are more discerning every year about where they spend their money. Despite the economic climate, institutions compete to attract students with state-of-the-art facilities and programs. They need to increase tuition to maintain the status quo, let alone improve. The effects of rising college tuition Regardless of the reasons for rising tuition costs, they profoundly impact every aspect of higher education. Continued cost increases have caused a seismic economic shift, which has a ripple effect well beyond the world of higher education. Cash-strapped students spend less on and around campus, and graduates paying off massive student loans cannot save to buy homes, which means they balk at other large purchases. The effects of soaring higher education costs are felt keenly closer to home. They include: Intensified student debt crisis Around 45 million Americans have debt from student loans that total more than $1.7 trillion. This debt has skyrocketed in recent years, outpacing most other forms of consumer debt. The average student is borrowing more to cover the increasing cost of tuition. Interestingly, higher debt from graduate or professional degrees can pay off more consistently with higher incomes. In contrast, students who fail to complete their degrees struggle the most to make good with the bank, and their default rate is three times higher than that of graduates. An average of 8.15% of student loan debt is in default at any given time. This number will likely increase as students extend their credit to cover the cost of their qualifications. Enrollment and retention challenges In 2023, 73% of employers leveraged skills-based hiring. The job market is also changing. Skills and talent shortages are forcing employers to look beyond credentials, leveling the playing field for the upcoming workforce. While college degrees have significant ongoing value, workforce trends and tuition expenses are changing perceptions of higher education. Only 22% of Americans say the cost of a four-year degree is worthwhile, even if it requires taking out loans. When the cost of running a higher education institution is rising, these institutions must also grapple with a group of college-eligible students rethinking whether to attend at all. Those who start are more likely to withdraw, with more than 40 million students unenrolled. One in four students is at risk of not completing, and about half of the students at risk of dropping out cite finances as a primary concern. Despite their best efforts, many higher education institutions face declining educational quality as costs rise. Institutions may need to cut programs and services as they extend themselves to keep up with the lack of state and federal funding. More than ever, they rely on tuition and fees to stay afloat, resulting in a potential lack of resources for students looking elsewhere to fulfill their academic needs. And so, the cycle continues. Workforce and social implications The cost of college affects student groups differently. Many feel forced to abandon higher education in pursuit of immediate earnings, which adversely impacts their capacity to compete for high-paying jobs in the future. In time, skill-related shortages will intensify. Economic stagnation is another prime concern. Non-degree holders often have an income cap, which limits their contribution to economic growth. Another significant impact of rising tuition costs is their effect on access to higher education. As costs skyrocket, low-income and first-generation students find it more challenging to attend college. They become stuck in a cycle within the workforce, as their options are limited. For institutions, this means a lack of diversity within the student body, which carries over into the workforce. Solutions and strategies for higher education institutions Fortunately, institutions can employ a few strategies to weather the storm of rising tuition costs: Assess current budgeting models Many institutions already have an actionable strategic plan for containing costs. However, many previous strategies fall short of being achievable in today's changing economic landscape. Institutions may need to implement a different budgeting model, which begins with gathering data on their allocation processes and outcomes. From there, they can compare their datasets with those of other colleges to serve as benchmarks. Data tells institutions where they're spending the most and whether it's effective so they can identify opportunities to cut back. Some common budgeting pitfalls include: Rushed hiring: Filling open positions fast can be more expensive than hiring part-time or adjunct faculty until there's more budget gaps: A discrepancy between enrollment numbers and academic budgets can mean some departments receive more funding than they tech: The more software tools an institution uses, the more it spends on maintaining licenses and training administrative staff. Institutions can save costs and time by purchasing an end-to-end solution. Prioritize institutional efficiency and data-driven decision-making The more institutions can keep their costs down, the better they can alleviate the burden on students and their families. In any crisis, the first step is to focus on what matters, streamlining administrative processes and reducing unnecessary spending. The systems they use to capture assessment, student, faculty, and administrative data can answer pressing questions about how they use their time and resources. Many institutions struggle with siloed data, which prevents them from getting the full picture of their effectiveness. Data centralization is a practical solution that reduces the oversight required to manage several unconnected systems. With centralized data, institutional leaders have a complete view of performance, enabling informed decision-making around strategic priorities and resource allocation. Focus on accreditation Despite the pullback in state and federal funding, students who receive it must attend an accredited institution or program. In many cases, employers of nontraditional students will ascertain whether a program is accredited before providing tuition assistance. Similarly, new employers prioritize graduates from accredited institutions. Higher education institutions must have accreditation to be eligible for state and federal grants, loans, and other funds. Despite its importance, the accreditation process is not without challenges. It requires preparation, collaboration, and the right set of tools. With the right approach, institutions can gather accreditation data in one place, seeing real-time insights to continuously improve. For many, the trick to successful and cost-effective accreditation is to be ready rather than scramble at the last minute to compile information. Enhance student enrollment and retention efforts Student satisfaction speaks for itself in many ways. Firstly, retention is cheaper than enrollment, so funneling resources into an engaged student body makes sense. Second, engaged and satisfied students are excellent marketing, solidifying an institution's reputation and, thus, potentially reducing outreach budgets. The first step is to measure institutional effectiveness using course evaluations, surveys, focus groups, assessment outcomes, and accreditation self-studies. Armed with information from students, institutions get a picture of their success on the ground and can divert resources into improvement opportunities, including enrollment and retention. The trick is to balance student support and academic quality with course effectiveness. The following tips can help institutions achieve this balance: Improve the academic experience: Helping students with financial burdens and academic challenges begins with providing a premium educational experience. Institutions can encourage faculty to be proactive using tools that boost mental health: Even within budget, institutions should offer beneficial and accessible mental health resources. They can foster holistic well-being through promoting faculty engagement and social resources. However, it's essential to connect students with this support and ensure they know how to access actionable intervention strategies: Institutions can use data to identify at-risk students and intervene to get them back on track. Providing assistance when students need it most is essential to any retention course content to meaningful careers: More than ever, students want to see how their coursework links to careers and earning potential. Institutions can cut costs and create roadmaps to successful careers with curriculum mapping. Curriculum maps give students a sense of purpose and direction and use faculty time more effectively while maintaining compliance with accreditation standards. Navigating the tuition tightrope - a way forward for higher education institutions The rising cost of higher education is multifaceted, and the fever shows no signs of breaking. The costs of running a successful institution contribute to rising tuition rates. These costs, in turn, intensify student debt, challenge enrollment and retention efforts, and create widespread economic disparities. However, higher education institutions are not without recourse. These robust strategies are assessing budgeting models, prioritizing efficiency, and enhancing retention efforts. Data remains the driving force behind staying agile in higher education. It helps institutions enhance the learning experience and focus on curricula in a way that mitigates the impact of rising costs. Ultimately, institutions must take a proactive and strategic approach to achieve their missions and sustain the value of higher education. This story was produced by Watermark Insights and reviewed and distributed by Stacker. © Stacker Media, LLC.
Yahoo
16-06-2025
- Business
- Yahoo
Can I use a 529 plan to study abroad?
You can use a 529 plan for study abroad, but only at schools eligible for Title IV federal student aid. Qualified expenses include tuition, fees, book and room and board — but not travel, health insurance or daily living costs. Misusing funds can trigger income taxes and a 10 percent penalty. 529 plan withdrawals may be taxed by the host country, even if they're tax-free in the U.S. Yes – you can use a 529 plan to help pay for a study abroad program if the overseas institution is eligible for Title IV federal student aid, but using these funds internationally comes with strict rules. Not all schools or expenses qualify, and misusing the money could cost you in taxes and penalties. Before you book your flight, be sure to confirm your study abroad program is hosted at an eligible institution under the Department of Education. Make sure the funds are only being used for qualified expenses, and you understand which expenses are not covered. A 529 plan allows you to save money for 'qualified' education expenses. Generally, those include the normal costs of attending an educational institution. >>Learn more: Opening a bank account while abroad To count as qualified, expenses must be required by the school and directly related to your enrollment. Eligible costs include: Tuition and fees Books, textbooks, supplies and equipment Room and board, if enrolled at least half-time Computers and internet access Bankrate's take: If you're living off-campus, your rent must fall within your school's published room and board allowance. Save receipts in case of an audit. Even if the following are necessary costs while studying abroad, they cannot be paid with 529 funds: International health insurance or medical costs Flights and transportation Basic living expenses (groceries, clothing, toiletries) Cell phone plans Sports and activity fees If you use 529 funds to pay for these nonqualified expenses, the IRS will apply income tax to the withdrawals, as well as a 10 percent penalty on the earnings portion of the withdrawal. Covered by 529 Not covered by 529 Tuition and fees Flights and transportation Books and supplies Health insurance Room and board (must be part-time or full-time students) Daily living expenses (groceries, clothing, toiletries, etc.) Computers and internet Cell phone bills Sports and activity fees You can't 'double-dip' by claiming the American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit (LLC) on the same expenses you pay with 529 funds. If you use 529 funds for expenses already covered by those credits, those withdrawals may become taxable. Here's a step-by-step guide to make sure your withdrawal is tax-free and properly documented: Confirm school eligibility: Use the Federal School Code Search, which has the unique school codes assigned by the U.S. Department of Education to schools included in the Title IV federal student aid program. Get an official cost of attendance: Request a breakdown of qualified expenses from the school, including room and board limits. Calculate your qualified expenses: Only include tuition, fees, book and room and board. Exclude unqualified costs like travel or food. Withdraw only what's needed: Request a distribution from your 529 plan administrator, specifying who receives the funds — either the student, the school or both. Keep detailed records: Save receipts, invoices and course requirement lists. You may need them if the IRS ever questions the withdrawal. Using a 529 plan to fund study abroad can make sense — but not always. Here's what to consider. Your school abroad is Title IV eligible. You're earning a full degree or completing a semester abroad through a partner program. You want to avoid loans and already have funds saved in your 529. You're using funds for tuition and qualified room and board, not daily expenses. You're attending a school that isn't Title IV eligible — your withdrawals will be taxed and penalized. Most of your expenses will be for travel, insurance or other unqualified costs. You're participating in a short-term third-party program with hard-to-document expenses. You plan to take advantage of the AOTC or LLC tax credits and want to avoid overlap. Yes – you can often use federal financial aid for international schools, but only if the institution participates in the Title IV program. Eligible aid includes: Pell Grants Direct Subsidized and Unsubsidized Loans PLUS Loans Bankrate's take: Graduate students may have different aid limits, but many federal programs are still available abroad. Always confirm with your school's financial aid office. If a 529 plan won't fully cover your costs or your school isn't eligible, here are other ways to fund your experience: Apply for scholarships The U.S. Department of State provides a list of scholarships available for students studying abroad in different countries, typically provided by foreign governments. Scholarship search engines can help you find financial aid from private organizations. Manage your expenses Unless your study abroad plans are already set in stone, consider going to a country with a lower cost of living. Compare program costs between universities and try to find the right fit for your budget. Get a job Depending on which country you're planning to study in, you may have opportunities to work while you complete your coursework. Research visa requirements beforehand to understand what your options will be. You can also take a break between semesters and work at home before you travel. Be forewarned that if you're caught working without a proper visa, you may be required to leave the country, even if you didn't finish your course of study. Stick to a budget Choose locations with a lower cost of living, avoid tourist-heavy cities and continue being intentional with your spending. Saving plans are one financial tool you can use to pay for study abroad programs and can be a useful way to cover the expenses of education overseas. Consider all costs, including taxes, when factoring your decision and determine if using a 529 plan to pay for your education makes sense for you. If a 529 plan isn't the best option, and you don't have enough savings or free aid to cover your program, keep an eye on current student loan interest rates. Exhaust all federal options before turning to private ones. What are the tax implications when using 529 funds for international schools? Qualified withdrawals from a 529 plan are tax-free under U.S. law, but some governments may tax the funds. Always check local tax laws before using 529 money overseas. How do I know which international schools are eligible for 529 plans? The funds from a 529 plan can only be used to cover the costs of international schools that are eligible for Title IV federal student this complete list of International schools participating in the Federal Student Loan Programs. Only schools on this list are eligible.
American Military News
29-05-2025
- Business
- American Military News
IRS Direct File will be cancelled if Republican tax bill becomes law
The $3.8 trillion Republican tax bill that just passed the House includes a provision to kill off the popular IRS Direct File program, which lets people file their federal income tax returns for free online. The bill still needs to pass the Senate to become law, but if the bill is enacted as currently written, the Direct File program is slated to be eliminated within 30 days of the law's passage. The bill also requires the U.S. Treasury Department to create a task force to design a partnership between the IRS and private-sector tax service providers. The task force would need to identify ways to replace any 'free file programs and direct e-file tax return systems.' That includes the IRS Free File program, an existing public-private partnership. IRS Direct File, which is separate from the Free File program, is a popular free option that offers guidance and support as you fill out your federal income tax return and file your taxes directly with the IRS. Most taxpayers have rated the Direct File program positively: About 90% of taxpayers said their experience was excellent or above average, according to a survey by the General Services Administration of about 11,000 Direct File users in 2024. On top of that, interest in the program is clear: About 73% of taxpayers said they'd be somewhat or very interested in using Direct File, according to a Tax Policy Center report in March, based on a survey of taxpayers aged 18 to 64. The Direct File program has been in Republican lawmakers' crosshairs for a while. In December, almost 30 Republican lawmakers sent a letter to President-elect Donald Trump, calling for him to end the Direct File program on his first day in office. Lawmakers in the U.S. House of Representatives introduced legislation last July to end the Direct File program. Elon Musk, de facto head of the 'Department of Government Efficiency,' or DOGE — also isn't a fan of the program. In February, he posted on social media that the government tech office that developed the Direct File program had been 'deleted.' Currently, the IRS's Direct File page is still up and running. Direct File doubled its reach to 25 states for the 2025 tax season, up from 12 states in 2024, the program's pilot year. An estimated 30 million taxpayers qualify for the Direct File program in 2025, the IRS says. More than 140,000 taxpayers filed their federal tax returns through the Direct File program in 2024. The Direct File program also expanded to accept more types of tax situations for the 2025 tax season. While taxpayers who used the system in 2024 could claim a handful of tax credits, including the earned income tax credit and the child tax credit, that list expanded for this filing season to include the child and dependent care credit, among others. However, taxpayers who want to claim other tax credits, such as the American Opportunity Tax Credit for higher education costs, or the tax credit for the costs of adopting a child, won't qualify for Direct File. And if you're hoping to deduct IRA contributions, Direct File doesn't support that. (See the full list of credits and deductions supported by Direct File on this IRS page.) The Direct File program, now in its second year, allows taxpayers to file their federal tax returns electronically with the IRS. The no-cost tool guides taxpayers through every part of their federal income tax return. Taxpayers can file using a smartphone, computer or tablet. One of the program's advantages is that, if you have questions as you're working on your return, you can get live support directly from the IRS via chat or phone. IRS representatives can answer basic tax questions and help with technical issues in English and Spanish. The Direct File program has income limits, as well as limits on the types of income, deductions and credits you can enter on your tax return. For the 2025 tax season: —Your income must be less than $200,000 (less than $168,600 if you have more than one employer), and if you're married filing jointly, your spouse's income also must fall below these limits. —If you're married filing jointly, your combined income must be less than $250,000. —If you're married and file separately from your spouse, your income must be less than $125,000. To be eligible for Direct File, your income can come from the following sources: —W-2 wages —Social Security income —Unemployment compensation —Interest income —Retirement income (reported on a 1099-R — limited eligibility starts March 2025) But if you're self-employed, or have business or rental income, you can't use Direct File. Same goes for IRA contributions or distributions: If you have either, you can't use Direct File. You can use the IRS Direct File program only if you claim the standard deduction — the program isn't available to people who itemize. But you can claim certain above-the-line deductions: student loan interest, educator expenses and health savings account contributions. You can't use Direct File if you want to deduct your IRA contributions. The Direct File program supports the following tax credits in 2025: —Earned income tax credit —Child tax credit —Credit for other dependents —Child and dependent care credit —Premium tax credit —Credit for the elderly or disabled —Retirement savings contribution credit However, if you want to claim education credits, credits for energy efficient home upgrades or the adoption expense credit, you can't use the Direct File program. More taxpayers will have access to the IRS Direct File program in 2025. In 2024, the IRS kicked off the program with only 12 states; that number has expanded to 25 states for the 2025 tax season. For some of the states that participate in the IRS Direct File program, your federal return information will be transferred automatically to the state tax website, but in some cases you'll have to re-enter your information. Visit this IRS Direct File page to get the details for your state. Here is a list of the participating states: Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming If you don't qualify for the IRS Direct File program, you may have other options to file your tax return for free. In addition to Direct File, the IRS offers the Free File program, in which it partners with online tax software providers to provide free federal income tax return filing. Some providers also allow you to file a state income tax return. For the 2025 tax season, your adjusted gross income must be $84,000 or less to qualify for the Free File program. That AGI applies to any filing status: married filing jointly, single, head of household, etc. The IRS also offers the Volunteer Income Tax Assistance (VITA) program, which provides certified volunteers to prepare basic tax returns if you earn less than $67,000 a year, are disabled, or speak limited English. You can find a site near you by visiting this IRS page. ___ © 2025 Distributed by Tribune Content Agency, LLC.
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
24-03-2025
- Business
- Yahoo
Tax calculator: How much do I owe in taxes?
(NewsNation) — Nobody likes paying taxes, but it's even more frustrating to get blindsided by a tax bill you never saw coming. That's why it's important to have a general idea of how much tax you owe, which varies based on where you live, how much money you make and your filing status. The IRS expects more than 140 million individual tax returns to be filed by the federal deadline on April 15. If you need more time to file your return, you can request an extension, but you need to do so by the deadline. How long does it take to get your tax refund? If you paid more to the government through the year than you were required to, then you could receive money back as a tax refund. In 2024, the average tax refund was $3,138, and the IRS issued about 105 million refunds. That means thousands of dollars are potentially at stake when you file your federal tax Tax: State Tax: Total Tax: Effective Tax Rate: Take Home Pay (Monthly): The calculators on this website are provided for educational purposes only… From Your Money on NewsNation Several factors determine your tax bill, but two of the most important are your income and filing status. In the U.S., the federal income tax is progressive, which means as your income goes up, so does the tax rate. How to check your state tax refund status When your income jumps to a higher tax bracket, you don't pay the higher rate on your entire income. Instead, you are taxed only on the part that is in the higher bracket. Currently, there are seven federal income tax brackets with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your filing status determines which rate your income gets taxed at. The five filing statuses are: Single: If you are unmarried or legally separated as of Dec. 31 for that tax year Married filing jointly: You are married, and both you and your spouse agree to file a joint return. Married filing separately: If you are married, but you and your spouse do not agree to file a joint return Head of household: You are unmarried but take care of someone else who qualifies as a dependent Qualifying surviving spouse: Can be claimed for the first two tax years after the death of your spouse if you meet certain requirements If you're unsure about your filing status, use the IRS tool here. Tax season: How to file for free Depending on where you live, you may owe state income tax on top of federal income tax, which requires you to file a separate return. There are a few popular ways to lower your tax bill: Take advantage of tax credits: A tax break that reduces your tax liability dollar for dollar, potentially increasing your refund. Popular credits: Earned Income Tax Credit (EITC), Child Tax Credit (CTC), American Opportunity Tax Credit (AOTC), Saver's Credit Maximize your deductions: Tax filers can claim the standard deduction, which reduces their taxable income by a specific amount. Others, particularly homeowners, may choose to itemize their deductions, lowering their taxable income by subtracting certain expenses like mortgage interest. Contribute to a retirement plan: Saving for the future can help lower your tax bill today. Contributing to a traditional 401(k) reduces your taxable income, which may cut your tax bill. Putting money in a traditional individual retirement account (IRA) may be tax deductible depending on your income and retirement plan at work. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
