As tax season approaches, students have a unique opportunity to reduce their tax burden with a form that enables tuition payers to receive tax credits with their returns.
The 1098-T form decreases the tax liability for those who are enrolled in a post-secondary education program, giving students or their parents some extra cash on their returns.
“Students should pay attention to their form 1098-T, because that form has information about the qualified tuition and expenses that could turn into cash in their pockets,” Lillian Mills, accounting professor and department chair, said.
UT submits 1098-T forms to the IRS automatically each year, which can be accessed through UT Direct. Although tax credits act similarly to deductions, credits can sometimes be more beneficial, according to accounting lecturer Kristina Zvinakis.
“You benefit from a deduction because it’s reducing your income, and then you have less income on which to pay tax,” Zvinakis said. “The credit is more beneficial because you calculate what you actually owe to the IRS, and to the extent that you are eligible for these education credits, you reduce your liability, dollar for dollar.”
Despite the fact that taxes can seem intimidating, Zvinakis said students can submit the form correctly if they follow the rules.
“I think that with a little bit of effort, it’s possible to read the instructions and understand how to calculate the credit,” Zvinakis said. “I also think that there are services available for low-income tax payers — which for the most part, students tend to be low-income tax payers — and so I think that those services are also hypersensitive to the fact that their services are beneficial, and so could provide some guidance.”
Accounting graduate student Kathleen Powers will host a seminar Thursday to discuss applying university income, such as scholarships, fellowships and stipends, to taxes.
“The seminar is directed to graduate students,” Powers said, “but will probably apply to some undergrads as well.”
Printed on Tuesday, February 2, 2013 as: Tax season can mean extra cash for tuition payers