Fizzle | Honest Video Training for Online Business Builders. Asa. Borrowing federal student loans gives you certain tax advantages. Whether you are in repayment, taking classes, or working, you may be eligible for these incentives. All of these deductions and credits have distinct eligibility requirements. Before claiming any incentives, consult a tax professional. For more information, consult IRS Publication 970.
Tax Deductions Student Loan Interest Deduction You may qualify for a tax deduction just by paying your student loans. Tuition and Fees Deduction You may be able to deduct qualified education expenses—including tuition and fees—paid for you, your spouse, or a dependent. If your MAGI is less than $65,000 ($130,000 if filing jointly), you may be able to deduct $4,000 in qualified expenses.If your MAGI is more than $65,000 but less than $80,000 ($160,000 if filing jointly), you may be eligible for a $2,000 deduction.If you make more than $80,000 ($160,000 if filing jointly), you are not eligible for the tuition and fees deduction.
Education Credits. HowStuffWorks "Claiming Tax Deductions" If you're unfamiliar with deductions, it helps to understand the different deductions available to you. Above-the-line deductions are deductions from your gross income. On your tax form, subtract the total above-the-line deductions from the gross income to get the adjusted gross income, or AGI. Everyone who fills out a Form 1040, whether they itemize or not, can claim above-the-line deductions. A standard deduction is an amount of money the IRS allows you to subtract from your AGI based on your filing status. If you itemize, you don't claim a standard deduction. In 2007, the standard deductions were Single, or married filing separately: $5,350Married filing jointly, or eligible widow: $10,700Head of household: $7,850 Itemized deductions, like the standard deduction, are deductions from your AGI. So if your combined itemized deductions are larger than the standard deduction you would normally claim, you should itemize.
What Are Tax Deductions? Tax deductions are one of the few tax topics that generate some excitement. While nobody likes to pay taxes, everybody loves to use deductions to lower their taxes. To put it plainly, a tax deduction lowers your taxable income, which therefore lowers your tax liability. Some people mistakenly think a tax deduction is a direct reduction of taxes owed.
That is actually a tax credit, which does directly reduce the amount of taxes owed instead of simply reducing your taxable income. Tax deductions come in two major flavors: the standard deduction and itemized deductions. The standard deduction is just that—a standard dollar amount set by the IRS each year. Itemized tax deductions require a little more work, but it can also mean a big savings on your total tax bill. Itemized deductions fall under these primary categories: Some Things to Consider If you do plan on itemizing deductions, there are a few things to consider. In addition, itemizing means careful record keeping. Investment Research. How to Make an Irregular Income as Regular as Possible | Evolving Personal Finance. One of the clients I coached recently wanted to talk over how to handle his irregular income. He was having trouble sticking to his budget because he ran his own business and his income fluctuated month-to-month.
I read a bunch of blog posts on the subject and my client found the strategies I suggested helpful, so I thought I would put all of it together in a blog post – with whiteboard drawings! Here’s what it boils down to: Use separate checking accounts to smooth out your income. Gather all of your irregular income into one account and then pay yourself (i.e. to your personal account) a regular salary. The more your income fluctuates, the more this strategy will help you facilitate a regular budget out of your personal checking account. 1) Open at least one additional checking account into which you deposit your irregular income (IIA).
If you run your own business, you must have a business account that is separate from your personal checking. Business Resources.