The Federal Tax Credits Blog

Posts Tagged ‘student_loans’

Question: Should I buy a house or use savings to pay off student loans?

I have about 36k in student loans at 6.8% interest. I also have about 30k in savings and take home about 4k. The 8k federal tax credit for first time home buyers ends on Dec 1 so I am wondering if I should just pay down my student loans or use the savings to buy a house. Case for buying home: 1. mortgage rates in the 5%s 2. lots of houses/condos for sale 3. 8k federal tax credit
Case of paying off loans: 1. come close to being debt free

Any advice would be appreciated.

Thanks.

Answer: I would put the money towards the loan if it were me. Get that student loan out of your hair asap. You take home 4k a month I assume, so over the next year set aside 2k as a down payment to a house – make double or triple payments on the last 6k of the loan and in a year you’ll have a decent down payment for a house and that loan should be almost completely gone. You’ll be able to get into your house without another big loan hanging over your head.

Most of the case for buying a home will still be there in a year. Interest rates are not going to go shooting back up anytime soon. There will still be plenty of houses for sale. As for the 8k tax credit, it’s a little bit of a help but when compared to the hundreds of thousands that you’ll end up paying for a house 8k is maybe 2% of that. Not to say that it isn’t some help but in your case I think paying off the student loan would be the priority.

IRS extends tax deadline to April 18; those with offshore accounts are warned to pay up; itemizers must wait to file

The Internal Revenue Service opened the 2011 tax filing season by announcing that taxpayers have until April 18 to file their tax returns. The IRS reminded taxpayers impacted by recent tax law changes that using e-file is the best way to ensure accurate tax returns and get faster refunds.

Question: Details of New 2009 & 2010 Tuition Tax Credits…?

I read an article in my local paper yesterday about the new tuition tax credit that was part of the Stimulus package, where you get a $1 for every $1 paid in tuition, up to $2,500.

I am currently Unemployed, and my sole source of income for 2009 has been UI benefits. However, I am also a FT student via a distance learning program, pursuing a BS. I have paid well over $2,500 in tuition this year, and the school is fully recognized.

Does this mean that I will likely qualify for the credit? Also, assuming I don’t have any liability (I am Head of Household with a small UI check), will I be able to have the $2,500 as cash in a refund?

Thank you!

Answer: You’re talking about the American Opportunity Tax Credit, which replaces and expands the Hope Credit. Your understanding on the calculation isn’t quite correct, and only part of it is refundable so if you don’t owe any tax you don’t get the entire credit. The first $2000 is dollar for dollar, and over that it’s 25%, so your credit would probably work out to $2100, and if you have no tax liability, up to 40% or $840 would be paid to you. Still a nice chunk of money.

See http://www.irs.gov/newsroom/article/0,,id=211309,00.html

Holland District Offers Advanced Classes

Several new opportunities are becoming available for students at the Holland Central School District. Advanced placement (AP) classes in the sciences may be offered next year to give students a head start at college, while a tutoring program has just started that provides older students an incentive for tutoring younger classmates.

Economic Stimulus Plan | Tax School | Tax Education | Liberty Tax Service

Question: Educational Tax Exemptions??

I’m an adult student , returning to college. I believe I have already used that Hope Educational credit a few years back, and it was my understanding that is a ‘one time’ thing. Are there any other educational exemptions I can use on my Federal Taxes? ( I’ve also worked all of 2007 part-time, and will be filing Single, Head of Household.)

Thanks in advance!

Answer: Lifetime Learning Credit.

In fact, in some circumstance the Lifetime Learning Credit can give you a bigger credit than the Hope Credit now.

James R. Pratt Jr. is appointed to supervisory committee

DARTMOUTH — First Citizens’ Federal Credit Union recently announced the appointment of James R Pratt, Jr. to their Supervisory Committee.

Excel Busn Math 42: Federal Income Tax Payroll Deduction