Seven Tax Breaks for Young Adults

The federal tax return filing deadline is less than two weeks away. If you’re among the procrastinators out there, we get it. You’ve probably been through a lot last year — attending or graduating college, moving to a new city, going back to school, starting a new job or maybe saving for a first home. When it comes to tax time, all those big moves mean you might be eligible for one of several credits or deductions.

So as the deadline approaches, make sure to review your options. And to help, we’ve outlined seven tax breaks you’ll want to check out:

1. Saver’s Credit

Ninety-four percent of young adults are saving according to Money Under 35, a new study conducted by Navient and the global market research company Ipsos. Twenty-nine percent of them say they are saving for retirement.

If you’re one of them, you can earn more savings when it’s tax time. So here’s the deal: individual filers can claim a credit of up to $2,000, or $4,000 for joint filers, for contributing to an Individual Retirement Account, 401(k), or similar qualified retirement savings plan. Individual filers whose adjusted gross income is less than $30,500, or $61,000 for joint filers, are eligible for the credit.

2. American Opportunity Credit

Are you a student? The American Opportunity Tax Credit is a per-student, partially-refundable tax credit. For tax year 2015, you can claim a tax credit of up to $2,500 for expenses on tuition, fees and educational materials in the first four years of post-secondary education. To receive the maximum credit amount, an individual filer must have a modified adjusted gross income of less than $80,000, or $160,000 for joint filers.

3. Lifetime Learning Credit

Or check out the Lifetime Learning Credit, a per-taxpayer, non-refundable credit of up to $2,000 that applies only to expenses for tuition and fees. Students in undergraduate or graduate programs or any continuing education program may be eligible. The credit may be claimed for any year in which qualified tuition and fees are paid. To receive the maximum credit amount, an individual filer must have modified adjusted gross income in 2015 of less than $52,000, or $104,000 for joint filers.

4. Student Loan Interest Deduction

The Student Loan Interest Deduction is an “above-the-line” deduction of up to $2,500 for interest paid on qualified federal or private education loans. To be eligible for a full or partial deduction, an individual filer’s modified gross income must be less than $80,000, or $160,000 for joint filers.

You should refer to the IRS Form 1098-E or other interest statement received from your loan servicer to help figure out the amount of student loan interest you paid on one or more qualified student loans during the year. For borrowers with loans serviced by Navient, filers may securely download their Form 1098-E from their online account. Navient customers who paid $600 or more in eligible student loan interest will be sent the statement automatically.

5. Tuition and Fees Deduction

The Tuition and Fees Deduction is an “above-the-line” deduction of up to $4,000 for qualified tuition expenses and related fees paid in 2015. In order to receive the maximum deduction, an individual filer must have modified adjusted gross income of less than $80,000, or $160,000 for joint filers. Taxpayers may refer to the IRS Form 1098-T provided by their school to help them determine the amount of qualified tuition and related fees they paid during the year.

6. Job Search Deduction

If you looked for a new job in your present occupation, you may be able to deduct related expenses like printing resumes, postage, and employment agency fees. You can deduct those expenses only to the extent that they exceed two percent of your adjusted gross income. Also, it’s important to note for young adults, this deduction is not available to first-time job seekers.

7. Moving Expense Deduction

You may also be able to deduct certain expenses for moving to a new home because of a new job or job relocation.

Some of the tax benefits listed above may not be claimed at the same time. For more information on the education-related tax benefits available for 2015, consult IRS Publication 970, Tax Benefits for Education, or a personal tax adviser.

Just remember to be aware of tax refund scams. Examples include Internet solicitations asking for Social Security numbers, fake flyers claiming refunds are given without eligibility, and claims for refunds or rebates based on fake statements. The IRS offers tips to help taxpayers avoid becoming a victim of these scams.

Nikki Lavoie is a spokeswoman at Navient, a student loan servicer helping more than 12 million customers successfully repay their student loans.

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