You may or may not have heard either of these phrases: “You can write that off” or “Yea, I think that is deductible”. However, you most definitely have heard this one: “Taxes are the worst thing known to man. I hate taxes.”—maybe with some different word choices. A common misconception is that deductions are only really accessible for affluent households or taxpayers. This is actually far from the truth because there are many credits for middle and lower income taxpayers— including Student Workers.
It is beneficial to have tax deductions or “write-offs” because they lower your taxable income (the amount you are required to pay) and allow you to pocket the money qualified towards these “write-offs”. There are many different ways to reduce your taxes, but most people are not aware of them; it is a common estimate that there are around a billion dollars of unclaimed tax refunds held by the IRS—internal revenue service. Among the most common tax deductibles are charitable donations, medical expenses and home equity loans. Stay tuned for a post explaining a student loan deductible by FICA.