If you qualify for $750 in tax credits, as indicated on Form 8863, Uncle Sam gets only $250 of your dough, not the original $1,000. It’s all very beautiful.
Tax season has arrived and April 15, the do-or-die deadline to get tax returns in the mail, looms near.
Anyone who paid tuition last year can take note of two tax credits — the Hope Scholarship Credit and Lifetime Learning Credit — to save up to $1,500.
Here’s what to do:
First, if you paid tuition at the University as a full-time student at any time last year you should have received an envelope from the University a few weeks ago. The form is the 1098-T, an instruction sheet.
Second, go to the University’s tax form Web site at 128.101.150.185/forms/tax.html and print out IRS Form 8863. You can have this mailed to you by calling the University’s tax hot line at (612) 626-9161.
Third, following instructions detailed on the 1098-T, go to your STARS account and fill in the required blanks on the 8863.
Fourth, rake in the savings by attaching the 8863 to your 1040 when you mail it in.
Assuming you don’t fill out tax forms to get your kicks, check out the University’s tax Web site, above, to make sure you are eligible for the credit before you do too much work.
On the site, a user-friendly Tax Credits Fact Sheet lays things out in real English. A longer explanation of the credits, in the language of the tax-impaired, is also on the Web site available under the title, Proposed Treasury Regulations.
Remember, a tax credit can save a person money only if they owe taxes, not just if a person had taxes deducted from their paychecks.
To find out if you’ll save anything from the credits look at Line 40 of your 1040 personal tax return when it’s complete. The line indicates whether additional taxes are owed or if poor John Q. Taxpayer will be mailing more money in with his tax return.
If the value on Line 40 says you have to pay $1,000, don’t cry. The Lifetime Learning Credit or Hope Scholarship could reduce the amount. If you qualify for $750 in tax credits, as indicated on Form 8863, Uncle Sam gets only $250 of your dough, not the original $1,000. It’s all very beautiful.
For more information from the Internal Revenue Service call (612) 625-8007.
The IRS can also help with questions regarding the student loan interest deductions, another keen way to save money.
— Kane Loukas