As a college student, you may be wondering whether you're supposed to file a tax return once tax season rolls around. For some college students filing a tax return is a necessity; for others, it may be optional.
When Students Are (And Aren't) Required to File Taxes
Whether you have to file taxes depends on several factors, including your gross income and whether your parents can claim you as a dependent.
Being a dependent, according to the IRS, means:
- You're under age 19 at the end of the relative tax year or under age 24 at the end of the year and a student.
- You lived with your parents for more than half the year.
- You didn't provide more than half of your own support for the year.
If you're a dependent, you may still have to file a return depending on your income. For the 2019 tax year, you must file a return if:
- Your unearned income was more than $1,100.
- Your earned income was more than $12,200.
- Your gross income was greater than the larger of $1,100 or your earned income (up to $11,850) plus $350.
If you're below those income thresholds, then technically you're not required to file a tax return. But it could still be a good idea to file.
"The only way to receive a refund of taxes withheld is to file a tax return," said Sheila Clark, director of The Income Tax School. So, if you worked a part-time or full-time job for the year and your W-2 forms show federal and state withholding, you'd need to file a return to claim a refund.
Also, keep in mind that while scholarships and grants are typically tax-free, there may be situations where you have to include them in taxable income. For example, if you used scholarship and grant funds for room and board, travel or optional equipment, or the money was received as payment for services you provided then you'd have to pay tax on those amounts.
How to File Taxes as a College Student
Filing taxes for the first time can be a little confusing but it starts with knowing which forms to file.
For most college students filing a tax return, that's the standard Form 1040. You'll use this form to report your income for the year and filing status, along with any deductions or tax credits you plan to claim.
Deductions permit you to decrease the taxable part of your income for the year. Credits offset any taxes you might owe to the IRS. If you have student loans or you pay education costs for yourself out of pocket, you may be eligible for the following deductions and credits:
- American Opportunity Credit
- Lifetime Learning Credit
- Tuition and Fees Deduction
- Student Loan Interest Deduction
Whether you can claim any of these tax benefits hinges on your dependent status.
"College students who are dependents on their parents' tax returns are not eligible to claim education credits," Clark said.
Instead, parents can claim those deductions and credits for themselves, regardless of whether the student paid education expenses. Clark said college students filing a tax return should first have a conversation with their parents about dependency so they understand what they can claim and what they can't.
Preparing to File Taxes as a Student
If you're gearing up to file a tax return for the first time, think carefully about whether it makes sense to file yourself or hire a tax professional. Filing yourself can save money but if you have a more complicated return that includes multiple W-2 forms, income from a side job or deductions and credits beyond those related to education, you may benefit from a professional's help the first time around.
Also, take the time to get organized. Round up your W-2 forms and forms showing interest paid on student loans if you have them. Getting these documents together before you sit down to file can make the process less stressful.