College Finance

College Finance

Tax Tips for College Students in Arizona


Are you about to attend any college in the state of Arizona? If that’s the case, maybe you should consider contacting a team of Scottsdale tax attorneys. Handling taxes may not be the easiest thing in the world, especially if you’ve never done it before. But we all start somewhere, and this is your chance to learn how to do things right. Doing it successfully the first time will ease things for the future.

Before you start college in Arizona, consider the following tips regarding taxes:

  • File Taxes If You Got a Paycheck

You may have no idea if you should file taxes or not. Well, just keep in mind that in case you got a paycheck during the previous year, you should file your taxes. Now, if a student made no more than $10,400 the previous year, is unmarried, and would file as an independent, filing is not necessary. However, it’s always best to do so in case they paid more on their taxes. This would give them a nice refund.

  • Have All the Documents Ready

When you file your taxes, you should ensure all of your documents are prepared. You will need your Social Security Number, an ID issued by the government or a driver’s license, a W-2 earnings statement from every employer you had the last year, and any state or federal tax returns you filed the previous year.

  • Be Aware of the Deadline

There is a deadline for filing your taxes. Sure, you may be excited for your new life as a student in Arizona, so excited that you may forget about everything else. However, forgetting about your taxes might end badly for you. The IRS is known to be strict regarding this matter. If you don’t file on time, you will deal with penalty costs. Since you’re a student, you want to save as much money as possible, so paying more because of penalties is not welcome.

  • Know What Is Taxable

Income is taxable, but this doesn’t involve only your salary. Tip income is taxable as well, for instance, and this is something you should bear in mind. So, you should report about $20 in cash tips to the employer. Moreover, remember that all of the annual tips should be reported on your tax return.

  • Get Familiar with the Tax Forms

Another very important thing that contributes to successfully filing taxes is knowing the tax forms. If you work for an employer, for instance, a W-2 form will be given to you. Meanwhile, independent contractors will get a 1099 form from every company.

If you took out a student loan, then you must also file a 1098-E Form that is basically a way to show the amount of interest you paid on the loan throughout the year.

The Bottom Line

If you are going to college in Arizona and you intend to work at the same time, it is essential to know how to deal with your taxes. Hopefully, these tips will be of use.

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College Finance

Help Your Child Pay for College with These Tips


Whether your children are toddlers or teenagers, you are probably concerned about the cost of their college education. While federal aid is available for many students, some families may not qualify but could still struggle to cover the cost of tuition, room and board. In other cases, federal aid might not be enough. The tips below can help you find other ways to help your child cover the cost of a college education.

529 Savings Plans

A 529 savings plan is the first stop for many parents, grandparents and doting aunts and uncles who want to help kids pay for college. These plans offer tax benefits, such as deductions for contributions and tax-deferred growth as long as withdrawals are used toward education. A 529 plan varies from state to state, so you should find out what the rules are for your state. You can create a 529 plan while your child is still an infant.

Roth IRAs

People usually use Roth IRAs to save for retirement, but they can be used to pay college expenses as well. Withdrawals for your child’s education are tax-free and penalty-free if they are simply the amount contributed. One advantage of a Roth IRA over a 529 plan is that it offers more flexibility. If your child decides not to go to college or puts it off, you can still use the money toward retirement. There are some complex issues based on your individual circumstances involved in deciding whether it is better to create a 529 plan for your child or use a Roth IRA, so you may want to talk to a financial advisor about the best option for your family.

Private Loans

If your child does not qualify for federal aid or you need to supplement it, private loans are another option. These are sometimes difficult for students to get on their own, but you can help with the approval by being a cosigner. This can also help lower the interest rate your child is offered. You can research private student loans online and find out what options might be available.

Other Options

There are a number of other options, and you can help your child research those options based on their aptitude, ambition and career path. For example, if your child is interested in joining the military, there are several tuition assistance programs available. Another option is going to work for a company that pays college tuition. Some colleges offer free or reduced tuition for staff.

Private scholarships and grants can be a lucrative source of funding for college, ranging from a few hundred dollars to offering students full tuition and more for four years. Some scholarships are very specialized and do not have many applicants, so it is worth digging into what may be available. A common mistake that parents and children make when looking at colleges is assuming that public state universities are always cheaper than private ones. While this is usually the case when it comes to tuition costs, some private universities may offer financial aid packages and scholarships that outstrips what a public university may have available.

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College Finance

How a Student Loan Can Affect Your Taxes


Student loans are extremely helpful. Many people want to get that diploma they’ve been dreaming of for a while, and a student loan may be the only way to get it. But it’s all good until you’re done with your studies. You have the diploma, but you are left with the student loans.

Before you get a corporate tax attorney, it’s important to be aware of the different ways your student loan can affect your taxes. Let’s see how your student loan will influence you even after you graduate.

  • Student Loan Interest Is Deductible

Student loans are quite a burden, and the interest certainly doesn’t make the situation better. Luckily, the government is aware of this, and they can offer students an interest deduction. Through the deduction, the amount of interest you pay during the year can be reduced up to $2,500.

Of course, this is just for the paid interest, not the full loan payments you’ve done to be able to study. Also, to qualify for a loan deduction, the interest you pay must be for a qualified student loan, respectively one that you took out either for yourself, for your spouse, or a dependent for education costs. Expenses that qualify are books, room, tuition, and board during the time of the study.

  • Loan Forgiveness Might End Up in a Big Tax Bill

If you use the government’s Public Service Loan Forgiveness program or if you settle for an income-driven repayment plan, your federal student loans can be forgiven. These options have their own effects on your taxes, though.

If you managed to make 120 on-time loan payments while you were working full time at a non-profit or government agency, you will qualify for Public Service Loan Forgiveness. Even better, you will not have the forgiven amount taxed either.

But when it comes to a borrower on an income-driven plan, he/she will pay income tax on the forgiven loan balance the year the period of repayment ends. As a result, parents or grads who have high loan balances might deal with a very big tax liability.

  • Your Loan Payment Might Increase If Filling Jointly with a Spouse

A lot of grads go with income-driven repayment plans in order to repay their federal student loans, but these plans can put a limit on your monthly payment. It would be only a percentage of the discretionary income. After you make payments towards the loan for 20 or 25 years, your loan could also be forgiven.

However, how you file your taxes can affect the amount you owe through income-driven plans. Filing jointly with your spouse means that the payment will be for two combined incomes, so the bill might also get bigger, or might even disqualify you for some specific repayment plans if your income is very high.

This is why filing taxes separately might be better in this regard. But that may also have disadvantages, limiting your ability to contribute retirement savings to a Roth IRA and removing your possibility of making some tax deductions or credits.

Final Thoughts

If you have a student loan or you’re planning to get one, you should know how it will affect your taxes in the future. Get familiar with the effects before making the decision.

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College FinanceStudent Loan

Clean How Students with Divorced Parents Can Maximize College Financial Aid


College is quite expensive, as you may already know. The money required to apply for college makes parents start saving even before their child is born, depending on income.

As such, you can imagine how hard it is for students with divorced parents to get their hands on just enough money to apply for college and not worry about too much afterward.

Because of this, today’s article will take a look at how those students can maximize the college financial aid that they can get. The government has some measures in place, meant to help people ensure their education, so to say.

FAFSA Regulations

Students are required to apply for something called FAFSA. This is a Free Application for Federal Student Aid, and it takes into account two years of income.

FAFSA manages married and divorced couples in different manners. As such:

  • When it comes to married couples, the FAFSA takes into account the income of both parents.
  • On the other hand, when it comes to divorced couples, the FAFSA only considers custodial parents’ income.
  • The only condition for the latter is that the custodial parent is clearly specified in the divorce agreement. This is why couples should not engage in a divorce without the aid of family law attorneys. If they forget to take care of something, their children may suffer the consequences.

Naturally, students can also work with their parents and further maximize college financial aid.

FAFSA Peculiarities

FAFSA is a relatively permissive application/form. Parents that wish the best for their children can make the system work in their favor. Students can do so as well, mainly if they express their wish to attend college.

Given this, here are a couple of things that can maximize financial aid:

  • The divorce agreement could name as the custodial parent as the one with a lower income. Moreover, the parents are also allowed to keep low “paper earnings” for the custodial parent so that the student (their child) enjoys increased financial aid.
  • Divorce is not mandatory – more or less. Students with separated parents can apply for single-income FAFSA if their parents have been living separately for at least half a year.
  • If the student’s custodial parent marries again, the new parent will have to be introduced to the FAFSA form.
  • Divorce agreements may not be FAFSA friendly, particularly when it comes to alimony and such. If that’s the case, divorced parents can amend the parenting plan once their child is close to college age.

The Bottom Line

Last but not least, keep in mind that colleges may come with personal financial policies that don’t adhere to the federal ones mentioned in FAFSA. It is recommended that both students and parents reach out to the institution and get informed.

As for the issue at hand, students with divorced parents could further boost their finances if their parents are on alert. The parents only have to consider that their child is about to go to college and take it seriously!

References and Sources

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