By May of this year, Americans will receive anywhere from $300 to $1,200 in the mail from the federal government.
where to goFree income tax return preparation
Who: Available for students, faculty and staff. No appointments are necessary.
When: The service is available Thursdays from 6 p.m. until 9 p.m. through April 10.
Where: Carlson School Of Management L-117
But many college students will miss out on the $168 billion economic stimulus package signed by President George W. Bush last week.
The stimulus plan, which lawmakers passed in a rare exhibition of bipartisanship in Washington, will not cover individuals who are still dependants.
A dependant is defined as any college student who is under age 24 and relies on their parents for at least half their living expenses, Mark Sellner, director of Graduate Studies in Taxation at the Carlson School of Management, said.
“This is in the news so much, if I was a student I’d say, ‘Well when do I get my check?’ ” Sellner said.
While there are a number of tax breaks that apply to students and parents alike, journalism junior Rodrigo Zamith – who is a dependant – said most students need all the financial help they can get.
“I figured the stimulus plan is supposed to help the people that need it, right?” he said. “I assure that college students could always use the extra hand.”
But Sellner said the stimulus plan wasn’t designed to help college students, like other tax benefits are.
“It was an economic incentive for people to spend more money,” he said.
But some aren’t convinced the plan will serve that purpose. Economics professor V.V. Chari said, historically, the rebates rarely have an effect on the economy.
As for excluding college students, Chari said the plan is “another act of thievery.”
“These thieves are interested in stealing money from young people and giving money to old people,” he said. “That’s about it.”
Chari said the best option for holding off a possible recession, economically speaking, would be to do nothing.
But since government officials largely don’t want to be seen doing nothing during economic hardships, Chari said, they often pass legislation like the stimulus plan.
As a result, the future holds higher debt for future generations, followed by higher taxes, which in turn, can actually have a negative effect on the economy, Chari said.
“My guess is they are very well aware of that and that’s why I describe it as theft,” he said. “The active redistribution serves no economic purpose, but it serves a cynical, political purpose.”
While not a dependant himself, mathematics graduate student Nicholas Kirchner said he also fears the effect the expensive plan will have on future generations.
“When it comes time to pay this, who is going to end up paying it?” he said. “These college students who are here now and don’t benefit from it are going to go out and get jobs.”
“They’ll be the ones reaping the effects of the inflation or the higher taxes,” Kirchner said.
Relieving the tax headache
Most everyone will still be scrambling to file their taxes by April 15.
Sellner said a number of tax breaks are associated with college costs, which many people miss.
Generally, the government gives tax breaks to parents because students typically don’t make enough money to take advantage of the breaks on their tax returns.
First, money from scholarships and fellowships are tax-free, Sellner said, which means students need not claim that money on their tax returns.
Student loan interest is also tax deductible up to $2,500 for those making payments on their loans, he said, but not for dependants.
Tuition and fees up to $4,000 are also deductible for parents who are paying their students’ ways, Sellner said.
A number of other credits exist for parents, including a Hope Credit of $1,650 per college student for the first two years, Sellner said.
Also, a Lifetime Learning Credit of up to $2,000 per family is available for parents who have a college student.
University students, faculty and staff can get tax help Thursday evenings at Carlson until April 10.
