- Days left

College students may need to file a tax return

College students need to remember the IRS tooSo you're a carefree college student, and to you, April 15 is just another splendid spring day. If you don't think you need to worry about income taxes, you may want to think again. By not filing income taxes, college students lose refunds (especially if they work) and tax credits. Not filing income taxes can also get you in hot water with the IRS. These common questions asked by college students to help you determine how to proceed.

Do I really need to file a tax return?

That depends. You don't have to file a tax return unless you've made $5000 or more from a job. If you have interest income, this will also affect whether or not you need to file. Just because you don't have to file a tax return, doesn't mean you should not. According to Kiplinger.com, in When Children Must File a Tax Return, "kids often get back most or all of their income taxes." Therefore, if you had money withheld from your paycheck, you will definitely want to complete a tax return. In addition, you may be entitled to certain credits on your taxes just for being a student.

What counts as income?
  • Any interest income from your bank.
  • Income reported on your W2 forms by your employer.
  • Business income as a freelancer or entrepreneur on a Schedule C form. (This would include selling cosmetics, peddling t-shirts, doing web design for a fee, or writing articles for Internet Web sites.) Remember that if you report business income, you can also report business losses and expenses such as mileage. Keep track of all of your receipts so you can report your business expenses.
Some education grants also count as income. According to IRS.gov, "you cannot exclude from income any part of the grant used for other purposes, such as room and board." Income from work-study programs at school are also tax deductible, even if it offsets college expenses.

Don't make so much money as a college student that it cuts off your financial aid and need-based scholarships.

Can my parents claim me as a dependent?

Independent students claim a personal exemption on their tax returns; thus their parents can no longer claim them as dependents. But if your parents pay more than half of your expenses, they can claim you as a dependent. Consider the advantages of this. If your parents don't claim you on their tax returns, their health insurance company may also cut you off.

According to moneycentral.com, "the available education tax credits will wipe out taxes that you owe, but they won't generate a refund. If you're not making a lot of money and don't owe any taxes, these credits can't help you." If your parents will benefit greatly by claiming you as a dependent, a compromise may be in order. Perhaps you can request some extra money if they claim you as a dependent -- and get a refund as a result.

What forms should I use for my income taxes?

The 1040EZ form assumes you are independent from your parents. If you use this form and your parents claim you as a dependent, you will both end up in hot water with the IRS. Instead, use the standard 1040 tax forms, which will also allow you to claim business income or losses, claim tax credits and income tax deductions.

What deductions can I take on my income taxes?

You can claim the Tuition and Fees Deduction, the Hope or Lifetime Learning tax credit, and the Higher Education Expenses Deduction on the tax return of whoever pays tuition. You must decide which of these deductions you will take, as you cannot take them all. In addition, don't claim a deduction on money from a tax-free education savings account.

Related websites: Walletpop.com taxes

Increase your money and finance knowledge from home

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

Video: Tax Guidelines About Gifting

Note: Some of the content of this video applies only to taxes prepared prior to 2012. It is included here for reference only. Find out the tax guidelines about gifting with help from TurboTax in this video on tax tips.

Video: What are Income Tax Rates?

Note: The content of this video applies only to taxes prepared for 2010. It is included here for reference only. Income tax rates change depending on both the amount of money you make and how you made it. Find out about income tax rates with help from TurboTax in this video on tax tips.

Video: How To Reduce Errors on Your Tax Return

Did you know that errors on your tax return can affect the amount of your tax bill and the amount of time it takes to get a refund? Fortunately, TurboTax helps you avoid errors AND be sure you're getting all the tax deductions and credits you deserve.

Does Your Company Need to File Form 1095-B?

A company is responsible for filing IRS Form 1095-B only if two conditions apply: It offers health coverage to its employees, and it is "self-insured." This means that the company itself pays its employees' medical bills, rather than an insurance company. A company that doesn't meet both conditions won't have to deal with Form 1095-B. Its employees might still receive a 1095-B, but from their insurer, not the employer.

Video: Who Qualifies for an Affordable Care Act Exemption (Obamacare)?

The Affordable Care Act requires all Americans to have health insurance or pay a tax penalty. But, who qualifies for an Affordable Care Act exemption? Find out more about who qualifies for an exemption from the Affordable Care Act tax penalty, how to claim an exemption on your tax return and how the Affordable Care Act may affect your taxes with this video from TurboTax.

Add a Comment

*0 / 3000 Character Maximum