Question of the week (May 11th)
Submitted by: Alberto H.
Student & Business Owner
Q: Hi Taxes Tampa,
I’m new to filing my own taxes and have no idea what qualifies as common deductions. What can I, as a student and new business owner, deduct that will maximize my refund? I have heard from class that turning my business into an LLC is the way to go but I am not sure the steps after that.
A: Hello Alberto!
Tons of college students are turning their passion into revenue and I see you’re part of the pack! Firstly, as a current or former college student, you have a couple of deductions on your side. You have the ability to claim the American Opportunity Credit or the Lifetime Learning Credit.
The maximum amount you can claim for the tuition and fees deduction is $4,000 per year. Eligible expenses include student activity fees you are required to pay to enroll or attend the school. For example, an activity fee that all students are required to pay to fund all on-campus student organizations and activities. Expenses that do not qualify are room and board, insurance, transportation, & living expenses.
It is important to note that to qualify for the AOC, you cannot be at the graduate level and the credit can only be taken 4 times. If you are a recent graduate however and do not qualify for these credits, you can still deduct that pesky student loan interest you pay!
Lastly, you can deduct all expenses related to your side business such as supplies, office expenses, parking/tolls, postage, legal & professional expenses, auto mileage, etc. The list is broad but be sure to track everything diligently! If you file for your business to be an LLC, you can either file form 2553 and become an S-Corporation or leave it as is and report all your income and expenses on your personal tax return on Schedule C.
We will be uploading a document under forms to help further clarify the education expenses and common college deductions.
Hope this answered your questions!
About Alberto H.:
USF Tampa English major pursuing a career in teaching. Passions include poetry, rhetoric and the study of ancient literature.