- 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

Goal Setting

Want to succeed? Then you need goals!

View Course »

Understanding Credit Scores

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

View Course »

TurboTax Articles

Top 5 Reasons to Adjust Your W-4 Withholding

Common lifestyle changes, like getting a job or getting married, can change your tax liability. To avoid being caught off guard by an unexpected tax bill or huge tax refund, you'll need to adjust your withholdings on your paycheck.

Does Everyone Need to File an Income Tax Return?

Not everyone is required to file an income tax return each year. Generally, if your total income for the year doesn't exceed the standard deduction plus one exemption and you aren't a dependent to another taxpayer, then you don't need to file a federal tax return. The amount of income that you can earn before you are required to file a tax return also depends on the type of income, your age and your filing status.

How to Write Off Sales Taxes

The Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes when itemizing your deductions. People who live in a state that does not impose income taxes often benefit most from this deduction. However, you might also be better off deducting sales taxes instead of income taxes if you make large purchases during the year and your total sales tax payments exceed those for state income tax. You can use either the actual sales taxes you paid or the IRS optional sales tax tables.

Add a Comment

*0 / 3000 Character Maximum