- 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.

Note:
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

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum