Top 6 Best Tax Tips for Online Education
Bryan Wong

Defined Tag: Tax and Finance.

Just like many facets of life, you can save money and earn
money back on your online education by utilizing these tax
tips:

1. File even if you made too little last year; many don't
realize that if you've had ANY money withheld from
paychecks, you have a refund coming. If you don't file,
you'll never get that refund, so file even when you didn't
make enough to compel you to file.

For 2006 tax returns and those under 65 years of age:

If you are a single filer and made $8,450 or more in 2006,
you need to file.

If you are a head-of-household and made $10,850 or more in
2006, you need to file.

If you and your spouse file jointly and you're both under
65, if you made $16,900 or more in 2006, you need to file.

If you're over 65, the amounts are as follows -

$9,700 for single filers.

$12,100 for head of household filers.

$17,900 for married couples filing jointly where one spouse
is 65+ years old.

$18,900 for married couples filing jointly where both
spouses are 65+ years old.

2. There are three main ways to save money, but you are
only eligible for one of them, so you need to choose the one
that best fits your specific situation.

a. Hope Scholarship Credit - It's a non-refundable tax
credit, not a scholarship. If you are eligible, you can
claim up to $1,500 for qualified tuition and related
educational expenses. However, you must file a federal tax
return to receive this credit.

Essentially, qualifications include

- being enrolled in a program leading to a degree,
certificate, or other recognized educational credential; -
being enrolled at least part-time for at least one academic
period beginning during the year; - being applicable for a
student's first two years; - the student not having a
felony drug conviction on his/her record.

b. Lifetime Learning Credit - Broader in scope than the
Hope Scholarship Credit, if you are eligible, you may be
able to claim a credit of up to a maximum of $2,000 for
qualified educational expenses.

Essentially, qualifications include

- being applicable to all years of postsecondary education
and to acquire or improve job skills; - being applicable
for full-time, part-time, or less than part-time students;
- being applicable for an unlimited number of years; -
being applicable for one (or more) educational courses; -
being applicable to even those who have been convicted of a
federal or state felony drug offense.

c. Student Loan Interest Deduction - Unlike the other two
options, this deduces the interest on your federal or
private loans. The maximum deductible interest on a
qualified student loan is $2,500. The amount you are
allowed to deduct is based upon your filing status and your
modified adjusted gross income (MAGI.) 

You can find out more information about all three at
http://www.irs.gov.

3. Don't wait until the last minute to figure out your
taxes; start early and save on the stress. 

You can go online to download the state and federal forms
you'll need - do this early to get an idea of what issues
may apply to your return.

On top of that, if you need help (and many people use
certified tax accountants to help prepare their taxes,)
it's easier to get that help sooner rather than later
because many people wait until the last minute to do their
taxes, so the tax accountants are often booked solid. 

Additionally, tax accountants will be under more pressure as
the April 15 deadline approaches, so you might be able to
get more answers to your questions if you go to him/her
earlier rather than later.

You can also utilize the IRS' knowledge of preparing your
tax returns by calling 1-800-829-1040. The call is
toll-free. You may be transferred several times during the
call - make sure to write down each person's name and
identification number for future reference later.

You can also see if an Internal Revenue Service volunteer
Income Tax Assistance site is in your community if you need
in-person assistance in filing your taxes.

4. Give yourself a weekend to work on your return.

No, this doesn't mean it will take you a whole weekend to
do your taxes, BUT the extended period without work or
school will allow you to take needed breaks when you get
tired and still allow you to double-check those numbers
before you mail or e-file that return. 

In fact, many suggest you take two weekends and the week
inbetween to make sure your tax returns are correct. Take
the first weekend to do your returns in a leisurely
fashion, then take the next week to seek any outside help
and ask any questions you have, then take that second
weekend to check the numbers again and mail or e-file that
return.

5. Practice on paper.

Even if you e-file your returns, it might be prudent to
practice on paper first because you can see the entire one
side of the paper and all pertinent information. Online, you
can only see so much of the tax form if you have the
magnification in your PDF viewer too high, thereby making
it more likely to miss errors and make mistakes. 

After you have figured everything out on paper, it's very
easy to just type in the correct numbers in the correct
spaces and then e-file it.

6. Make sure to make a copy of all forms before mailing or
e-filing them.

To be on the safe side, you should ALWAYS have a copy of
all of the forms of your tax return in the event that there
is a dispute over them at some point in the future. That
way, you don't have to rely on someone else providing that
information for you.

Utilize these tips and you will likely complete your tax
returns on time correctly with less stress and have better
chances of earning greater tax returns.