Earning a degree in the U.S. costs approximately $19,548 per year, according to The College Board.
However, for Plattsburgh State students trying to save up, they can access several tax deductions.
Students can claim tax breaks while still attending a university or when their loan bills start to arrive, according to an article in College USA Today.
PSUC lecturer of accounting Dean Steria said students should understand that if they get a tax break, it’s the government giving out money. It’s money they’ve been paying all year.
“When people get their weekly paycheck, a federal income tax is withheld,” he said. “At the end of the year, when they file their return, it basically matches everything up. And if people get a refund, that means they’ve overpaid during the year.”
Steria said people have misconceptions about tax breaks. He said he has adults who tell him the government is giving them money back.
“You’ve been letting the government use your money all year interest free,” he said.
Steria said, for this reason, students should reduce federal withholding and students should also set up an automatic deduction in their savings account. He also said they might get a large refund and feel inclined to go spend it, but he encouraged students to save their money.
“Especially if they’re taking out student loans. They can take that money and turn it around and put it back into those loans so they don’t owe as much,” he said. “Because, again, when you borrow the money, interest is accruing.”
Steria said there are specific tax credits students have for tuition.
PSUC sophomore accounting major John Cardullo said the American Opportunity Tax Credit is a great break for students.
The American Opportunity Tax Credit is a dollar for dollar credit up to $2,500. That means for every dollar a person pays in tuition, students can wipe out one dollar in taxes, according to the College USA Today article.
“I don’t have any loans or a job right now. It offsets the first four years of college so it just makes sense for me,” Cardullo said.
He also said he would use the money for his education.
“If it’s a $2,500 tax break, I would want to get a surface laptop because I need it for excell, and I would get a Lynda.com membership,” he said.
Lynda.com is an online video tutorial and training website for students looking to further their knowledge on various subjects, such as computer science or accounting with a yearly payment of $250.
While Cardullo liked the American Opportunity Tax Credit, PSUC sophomore business major Julissa Vera said she would invest in the Student Loan Interest Deduction.
“I feel like the tax break is fair for those who are independent,” she said. “If my income was less than $80,000, then I would get a deduction. I like that they would also deduct $2,500 in interest.”
Vera said if she took out a loan, then she would get a tax break but she said she’d use the money differently than Cardullo.
“I would want to use the money for a humanitarian cause. I’m a business major and I can always gain money, so I would donate it,” she said.
Vera said plenty of students don’t know much about taxes, and they should be more informed about their financial status.
“College students should educate themselves. It can help them if they’re in debt with money. I didn’t know about paying for tuition and the responsibility of paying off loans until I got to college.”
Steria also said that students might not be well-informed as well.
“So you have 18-, 19- and 20-year-olds, who haven’t filed income taxes very long, and it can be very confusing,” he said.
Steria said it’s very expensive to go to an accountant and that tax programs are hit or miss. Steria also said they have to consider what’s best for the individual student.
“Depending on whether they’re a dependent or not. It might be beneficial for the parent to take them instead of the student if the parents are helping out with tuition because they’re getting taxed at a higher rate so anytime you can reduce the amount that they’re getting taxed is going to be a bigger tax saving than if the student were to take them,” he said.
Steria said students should be aware that if they don’t file, they can get hit with substantial penalties even with refunds. He did say that if students don’t have all the pieces to file taxes, they can get an extension.
He said that the idea of a large refund might be nice at first, but students should know they’re giving money interest free to the government yearly.
“Try to do a projection for the next year. When you graduate and then you’re ready to get your first real job, and you start making decent money, you have to be careful that you have enough withheld,” he said.
Email Kavita Singh kavita.singh@cardinalpointsonline