College Students, Income Tax and Credits

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Category: Individual Taxes

Written by Wendy Levenfeld

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April 15 will be here sooner than you expect. If you are a student, you may want to find out if you have to file federal returns this year. Do part-time working college students need to file taxes?

Hmm, think that seems like a straight forward question? Well, think again.

Here’s the poop.

Many students hold part-time jobs and are not required to file income taxes because they do not make enough money. However, you could receive a refund if your employer withheld taxes from your pay. You are exempt if you do not expect to exceed the minimum filing requirement. Generally, if you are single, under age 65 and making W-2 wages, the minimum filing requirement is $9,350 (What does that mean “generally?”)

If you make $6,000 or less, you can discontinue your deductions and get a refund of the federal taxes you did pay. You may also qualify for the Earned Income Tax Credit or other tax credits, like tuition, etc.

BUT, if you end up earning over the $9,350, all bets are off and you may incur interest and penalties if you don't file. Serves you right for expecting inaccurately!

Say What?

We’re talking students here not PhD’s in economics! When will some common sense prevail…how ‘bout simply keeping it in the forefront of your mind, especially at tax time, that if you earned more than an even $10,000, you have to file??

And don't forget to acknowledge whether your parents or someone else is claiming you (especially if they're the ones paying for your college or a good chunk of it).  When you fill out that 1040EZ, the form asks if someone else can/is claiming you. Be honest because they're going to check anyway.

Students may benefit from keeping their last paycheck for the year, as it shows how much they have made and how much, if any, has been withheld.

Parents and students may be able to qualify for tax deductions, such as the Lifetime Learning Credit. This credit applies to individuals or dependents who are taking a college class that improves or teaches job skills. The American opportunity credit offers a maximum annual credit that changes each year. To receive the entire benefit, a taxpayer’s income must fall within certain parameters.

Students should take advantage of the American opportunity credit as well as many other credits the IRS provides.

Taxes can be tricky. The last thing you need is to have the IRS knocking at your door with their hand out asking for money you've already spent! Best advice, contact a certified tax preparer or if your parents are helping pay for college, hand over everything (W2s and 1099s) to them and let their tax preparer file for you.

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