Unlock the hidden tax benefits tailored for newcomers!
Concerned about finances? Recent studies reveal that women and Generation Z individuals experience the highest levels of financial stress.
American Opportunity Tax Credit: Should no one else claim you as a dependent, you may be eligible for a credit of up to $2,500 for expenses incurred during your initial four years of college.
Earned Income Tax Credit: If your earnings were modest last year, you might qualify for this credit. Single individuals with no dependents earning less than $18,591 could be eligible for a credit of up to $632, while those with three or more dependents and earnings under $59,899 might receive up to $7,830. Details on maximum credit amounts based on income and dependents can be located on the IRS website.
Lifetime Learning Credit: In the event that nobody else claims you as a dependent, you could potentially qualify for a credit of up to $2,000 for expenses related to post-secondary education or courses aimed at enhancing job skills.
Saver’s Credit: If you are not claimed as a dependent and have contributed to a traditional or Roth IRA or a retirement savings account, you may be entitled to a credit of up to 50%, 20%, or 10% of your contribution, depending on your income level.
Deductions:
Student Loan Interest Deduction: If you made student loan payments in 2024, you may deduct the amount of interest paid or $2,500, whichever is lower, from your taxable income.
Standard Deduction: The majority of individuals opt for the standard deduction, which permits a fixed amount deduction from income based on filing status:
– $14,600 for single filers or married couples filing separately
– $29,200 for married couples filing jointly or qualifying surviving spouse
– $21,900 for heads of households
Deductible Expenses: Beyond student loan interest, you may be able to deduct other expenses, such as contributions to an IRA or health savings account, and costs associated with the business use of your car or home. Notably, working from home does not automatically entitle you to deduct home office expenses; specific criteria must be met.
Itemized Deductions: Should you choose to itemize expenses rather than opt for the standard deduction, you can also claim deductions for charitable donations and gambling losses, including those incurred from sports bets.
Still feeling uncertain? Answer the following six questions to kickstart your tax return process.
Contact Rachel Barber at rbarber@usatoday.com and connect with her on Twitter @rachelbarber_
Originally published on USA TODAY: New to filing tax returns? Discover credits and deductions to maximize your refund.
