Huge tax stimulus for students

Push a desk to the center of the kitchen, pile a stack of scratch paper next to your calculator, and sharpen your pencils.

No, this isn't part two of Jef Otte's guide to killing yourself with school supplies—It's tax season!

Every year in America, according to the Internal Revenue Service, millions of dollars in tax refunds are left unclaimed by single, low-earning individuals.

So stop skimming off the top of student loans and pretending that a four-mountain pass is an essential tool to enrich a passion for Earth sciences—save that money for rent and fill out tax forms as quickly as possible.

Without hours to devote to navigating the IRS website, perfecting a tax return can seem like a daunting task. So the Denver Asset Building Coalition is here to help. The coalition is a nonprofit group of volunteers who help fill out tax forms for the underprivileged for free.

"We have an income threshold of $49,000, which I would imagine most students will fit under," Executive Director John Russell said. "The $49,000 is based on the earned income credit, and we do not discriminate on whether or not you have children."

The Earned Income Tax Credit is a credit for those who make under $49,000 a year, are between 25-65 years old, and are single. Those under 25 can qualify if they have children, according to the IRS.

"The Earned Income Credit is the largest anti-poverty mechanism the country has," said Russell. "Twenty percent of the people who take advantage of the EITC are raised above the poverty line because of it."

The credit is not dependent on the amount of money owed to the government.

"If you don't owe any taxes, you can still get access to this credit," Russell said. "However, the tax credit only pays if you have earned income—the credit itself ranges from a few dollars to a few thousand dollars."

Russell explained a positive scenario in which a taxpayer benefits from the credit.

"If you had two children and you made $20,000 a year, you could be getting $5,000," he said. "You would be looking at getting 20 percent of your income in one tick."

Don't have children? That's when not being a geezer or a baby comes into play. A person could still earn more income in his return as an underpaid graduate student or nontraditional undergraduate student.

For students under 25, there are many tax credits to take advantage of. According to the IRS, there are four different tax refunds catered to students.

The Hope Refund:

This refund is for any students in their first two years of school. Grant money is never refunded, because it is already a gift from the government, but any other money paid on tuition can be deducted from owed taxes to create a tax refund.

If parents pay tuition, and the student is a legal dependent, the parent gets the Hope refund—not the students.

Lifetime and Opportunity Credits:

Available for students who pay for their tuition through loans and their own money—these refunds are available to most single students, regardless of how many years they've completed at school.

Tuition and School Expenses:

According to the IRS, "You may be able to claim a tuition deduction of up to $4,000 of qualified education expenses paid during the year for yourself, your spouse, or your dependent. The qualified expenses must be for higher education."

American Opportunity Tax Credit:

This is the new education credit that President Barack Obama enacted. It is for the first four years the student is in school. This is especially great for non-traditional students, because the credit is applied to parents in dependent student situations. This $2,500 credit is for 2009-2010, and tuition, fees, and course materials apply.

Ever wondered about paying the interest on a currently active student loan? Paying the interest also qualifies students for a credit available to higher education students.

As Russell stated, not knowing how to file taxes creates problems for local communities.

"Helping tax refunds get into the community through aiding in people filing their taxes correctly regenerates money back into the community," he said.

"For every $1 earned by a tax credit that's paid back into the community, $2 are generated in the local community," he said. "That money is multiplied by purchasing goods in the community. Buying multiplies in economy."

This year, UC Denver's business fraternity, Beta Alpha Psi, is volunteering its time with the Denver Asset Building Coalition.

Faculty sponsor professor Ann Martin explained why members of Beta Alpha Psi volunteer.

"The reason Beta Alpha Psi students volunteer for the Denver Asset Building Coalition is because it is a part of their mission, which is professional development service to the community," said Martin. "The students really enjoy volunteering. It's a service that is valuable—and the Beta Alpha Psi students feel they get more out of it than they put in."

Martin also encouraged students to choose to benefit from this service.

"Students can be taken advantage of during the tax season," Martin said. "They can be charged a lot. But if they fit the right profile, [filing taxes] is a free service."

Many people go to tax preparation companies like H&R Block during the tax season—but the Denver Building Asset Coalition recommends against that.

"If you only look at your refund, like the earned income credit, a couple hundred dollars doesn't seem like much to get access to your money," Russell said. "But, if you look at your annual income, in order to pay for a tax preparation company to file taxes, our clients have to work 32 hours to pay for that loan, based on an $8 income."

Susan Baca, manager of the Arvada H&R Block branch, noted that while companies like hers are more expensive, that expense is paying for the experience of the preparers.