Back to School Tax Tips for High Schoolers

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As high school students head back to school, parents have a lot on their plates. Amidst the hustle and bustle, it's important to consider the tax benefits that can ease the financial burden. In this blog, we'll provide valuable tax tips for high schoolers and their families, ensuring you maximize your savings this school year.

Tax Deductions for High School Expenses

High school can be an expensive time for families, with costs ranging from textbooks to extracurricular activities. Luckily, some of these expenses can be tax-deductible.

Books and Supplies

While direct deductions for books and supplies aren't always available at the federal level, some states offer tax credits or deductions for educational expenses. Keep receipts for all school-related purchases, as they might be beneficial when filing state taxes.

Extracurricular Activity Costs

Participation in extracurricular activities like sports, music, and arts can incur significant costs. Although not directly tax-deductible, you can use funds from education savings plans, such as Coverdell ESAs, to cover these expenses, as they often qualify as educational costs.

Credits and Scholarships

American Opportunity Tax Credit (AOTC)

The AOTC is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. While high schoolers don't typically qualify, families can plan ahead. If a high schooler is taking college courses for credit, those expenses might qualify for the AOTC.

Scholarships and Grants

High school students often apply for scholarships and grants to fund their education. While scholarships and grants are generally tax-free if used for qualified education expenses, any portion used for non-qualified expenses (like room and board) is taxable. Understanding these rules can help in planning and reporting correctly on your tax return.

Work-Study and Part-Time Jobs

Managing Taxes on Earnings

Many high school students work part-time jobs or participate in work-study programs. It's important for both students and parents to understand how these earnings are taxed. Students will need to file a tax return if their earned income exceeds the IRS threshold. Encouraging responsible tax habits early can set students up for financial success.

Educational Savings Accounts

Utilizing 529 Plans for High School Expenses

529 plans aren't just for college. As mentioned in our previous blog, they can also cover up to $10,000 per year per student for K-12 tuition at public, private, or religious schools. This can be a significant benefit for families looking to use tax-advantaged savings to fund high school education.

Conclusion

Navigating the tax benefits available for high school students can be complex, but the potential savings are worth the effort. By understanding and utilizing these deductions, credits, and savings plans, families can ease the financial burden of high school expenses.

For personalized advice tailored to your family's needs, contact Tax Pros HQ. Our experts are here to help you make the most of your tax benefits and ensure you're fully prepared for the school year.