What If Youre Filing Taxes As A Student With No Income
When filing taxes for students, note that:
If you didnt work, that doesnt necessarily mean that you didnt have any income for the year.
All of these are considered taxable sources of income:
- Scholarships can be partially taxable as detailed here
- Interest on bank accounts, dividends on stocks & capital gains are taxable
- Self-employment income
- Other income such as babysitting, lawn mowing, and house sitting can be taxable
Concerning the last bullet point:
These sources of income are called miscellaneous income. With reported Misc. income you should receive a tax statement from the individual you worked for.
Most people arent going to report giving you income for small, side jobs. Usually, its the full-time gigs that report.
QUICK ANSWER: If you truly had no income for the year, you do not have to file taxes.
How To Know If You Need To File A Tax Return
As a full-time student, you may not make enough money to need to file a tax return. However, if you work during the summer, enter a work/study program at school, or are only enrolled in classes part-time, that may not be the case.
In 2018, if you are not a dependent on anyone elses return, you must file your own return if your gross income is $12,000 or more . If you file as Head of Household , you must file if your gross income is $18,000 or more.
And thats not all. If your gross income is lower than those amounts and someone else can claim you as a dependent, you may still have to file your own return. If your filing status is Single, you must file a return if any of the following are true in 2018:
- your unearned income, such as interest and dividends, was more than $1,050
- your earned income, such as wages, was more than $12,000
- your earned and unearned income together total more than the larger of $1,050 or your total earned income plus $350
You should always file a return if you had federal or state income tax withheld from any payment. Its worth the few minutes it takes to file a return to find out if youre due a tax refund.
What Tax Forms Do Students Need
If you’re filing taxes for the first time as a student, it’s a lot to keep track of all the forms you need. Here are some of the key forms for student taxes.
- 1040: This is the basic income-reporting form that nearly everyone uses. You might have to complete multiple add-ons called schedules. You should complete Schedule 1 if you made student loan payments. Complete Schedule 3 if you want to claim credits for education or child care expenses.
- State tax return forms: States have their own rules for who must pay state taxes. State tax websites typically provide forms for residents, nonresidents, and part-year residents.
- 1098-T: This form tells the IRS how much you paid in tuition and fees. Your school completes it and mails it to you or a parent. You need to include it when you file your taxes.
- 1098-E: Did you pay any interest on student loans last year? If so, your loan servicer should mail you this form. Include this with your tax filing to deduct interest payments from your taxes.
- 8863: Download and complete this form to see if you qualify for tax credits for college students.
- W-2: If you made $600 or more at work last year, your employer must provide you with a W-2. This form will show if you had any income tax withheld. Make sure you include it when you file your tax return.
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Filing Taxes For Students
Todays post has everything youre going to want to know about filing taxes for students.
Im answering all your questions to make it as easy as possible for you, BECAUSE
Taxes are confusing and tricky!
Its like the government wants us to mess up so they can get more money in penalties. And I think wed all prefer to avoid that
My goal is to help you keep, or get back, as much money as possible .
Ill explore everything there is know about from which form to use to how you can file for free online.
Gather Your Tax Slips
Before a student files a tax return, they must gather all of their necessary tax slips. Students should be looking for the following slips depending on their own individual situation:
- T4 Statement of Remuneration Paid: Many students work throughout their studies or while on summer vacation. They should receive a T4 slip and remember, if they work in the hospitality industry, they need to also claim their tips and gratuities as income.
- T4A Statement of Pension, Retirement, Annuity, and Other Income: Students may receive a T4A tax slip showing income received for different reasons. Lets look at the different types of income on this slip and where they are reported.
- Educational Assistance Payments from a Registered Education Savings Plan are shown in Box 042 of the T4A slip and reported on Line 13000 Other Income of your tax return.
- Students who receive financial awards such as Scholarships, Bursaries, Fellowships, Artists Project Grants, and Prizes will receive a T4A with an amount in Box 105. Its important to note the Scholarship Exemption and ensure you enter your Box 105 amount into the correct box of your tax software in order to receive the exemption. The taxable portion of these scholarships/awards will be entered on Line 13010 Scholarships, Fellowships, Bursaries, and Artists Project Grants of the tax return.
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You Need To Report All Your Income
As a college student, you could be earning income in all sorts of ways. For tax purposes, you need to report all of them. Taxable income comes from wages or salaries. It also comes from tips or money you earn from a side-gig. In some cases, even your scholarship is taxable. The good news is, you dont have to pay taxes on every dollar you earn. The amount of income tax you owe is based on your total income, minus any allowable deductions.
Deductions are specific expenses that the IRS allows taxpayers to subtract from their total income for the year. Once all deductions are taken, the remaining incomealso known as taxable incomeis taxed at a determined rate. Almost all taxpayers are eligible to take a standard deduction. If you are filing as single, your standard deduction is $12,000.
Irs Rules For Parents Claiming College
Normally, the IRS only allows parents to claim a child as financially dependent until he or she reaches age 19. The age limit increases to 24 if you attend college full-time at least five months out of the year. Here are some other criteria to indicate a dependent status for tax filing purposes:
- The dependent is a biological or adopted child, stepchild, sibling, stepsibling, or a child of a sibling or stepsibling.
- The person claiming the deduction for a dependent must provide 50 percent or more of the dependents financial support. For IRS purposes, support includes such things as food, shelter, clothing, and medical care.
- The 19 to 24-year-old dependent must have lived with parents or other guardians for at least half the year. However, the IRS does allow exceptions for college students temporarily living away from home.
- The college student must be a natural or legal immigrant of the United States.
You should file your own tax returns if one or more of these IRS criteria do not apply to your situation.
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Figuring Out Your Dependency Status In College
Your parent, foster parent, or another relative likely claimed you as a dependent on their taxes in the past. As long as you’re in school, a relative can claim you as a dependent until you’re 24 if they provide more than half of your financial support.
Your dependency status matters for a couple of reasons. First, as mentioned above, it affects whether or not you must file taxes as a student. Second, the person who claims you as a dependent may qualify for deductions and education-related tax credits.
Should My College Student File His Own Taxes
An unmarried dependent student must file a tax return if his or her earned or unearned income exceeds certain limits. To find these limits, refer to Dependents under Who Must File in Publication 501, Dependents, Standard Deduction and Filing Information.
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What Can You Claim On Your Taxes For A College Student
Filing taxes for students and wondering what education specific deductions you can take?
Thankfully some college expenses are tax-deductible!
Its nice to know that youre getting something for working your ass off! I mean, besides the degree.
Do you get a tax credit for being a student?
QUICK ANSWER: YES!
As youre learning the right way for filing taxes for students, here are some tax credits to be aware of
Dont Pay To File Your Tax Return
Most college students have relatively simple tax returns, says Mark Kantrowitz, publisher and vice president of strategy at Cappex.com, a website that helps students compare colleges and find scholarships.
If youre filing either form, you probably dont need to pay someone to do your return for you, Kantrowitz says. Instead, he recommends learning how to file it yourself or using a free online tax preparation service.
If youre not comfortable with filing on your own or you want to avoid mistakes, Byrd recommends seeing if theres a Volunteer Income Tax Assistance program in your area that can prepare and file your taxes for free.
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The Lifetime Learning Credit
The Lifetime Learning creditwhich can be as much as $2,000 per tax return, based on 20% of up to $10,000 of qualifying higher-education expensesis available for an unlimited number of years for just about any degree or non-degree course.
- You can only claim one Lifetime Learning credit per year, no matter how many students you have in your household.
- For 2021, the income limit for is $180,000 if you are married filing a joint return.
- For 2021, the income limit is $90,000 for single taxpayers.
- Above these income levels, the credit is phased out.
You cannot claim both the American Opportunity credit and the Lifetime Learning credit for the same student in the same year.
Lifetime Learning Tax Credit
The Lifetime Learning Tax Credit can reduce your tax bill by up to $2,000 and applies to people who pay for tuition or undergraduate, graduate, and professional education. You can claim the Lifetime Learning credit every year that you qualify.
A student must meet these requirements in 2020 to qualify:
- You or your dependent must pay qualified education expenses for higher education
- The eligible student must be enrolled at an eligible institution
- The eligible student is you, your spouse, or your dependent
- Single filers must have a MAGI of $58,000 or less for the full credit
- You are not claiming the American Opportunity Tax Credit for the same tax year
If you qualify, you can claim 20% of the amount paid toward qualifying expenses, up to a credit of $2,000. However, the Lifetime Learning Tax Credit is not refundable.
Note: For tax year 2021, the income limits for the Lifetime Learning Credit will increase to match the income limits for the American Opportunity Tax Credit.
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What Is The Difference Between Turbotax And H& r Block
H& R Block covers more filers with its free option. The two Deluxe options are the same in terms of price, but TurboTaxs Deluxe option supports more forms that self-employed, freelance and contract workers may need. Both services are user-friendly but TurboTax is slightly simpler with more straightforward language.
Tax Breaks For College Students
One advantage of filing taxes as a student is that you may qualify for education credits or deductions. Two types of tax credits exist for college students or people who claim students as dependents.
AOTC is available to some students or parents of students. To qualify:
- You must be in your first four years of higher education.
- You must be enrolled in a degree, certificate, or another postsecondary program at least half time.
- The filer’s MAGI must be under $90,000.
AOTC offers a credit back for certain education expenses, such as tuition, up to $2,500. In addition, this credit is refundable. That means if the credit covers more than the amount of taxes you owe, you can get some of the remaining credit refunded to you.
If you don’t qualify for the AOTC, you may still be eligible for the LLC. The LLC is for part-time or full-time students enrolled in a degree, credential, or job-skills training program. Plus, you can use it even if you’ve already completed four years of higher education.
The LLC may provide up to $2,000 in credit. Unlike the AOTC, it is not refundable. To see if you qualify for either student tax credit, make sure you complete form 8863.
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Filing For Educational Purposes
Filing income taxes can teach children how the U.S. tax system works while helping them create sound filing habits for later in life. In some cases, it can also help children start saving money or earning benefits for the future as noted above.
Even if your child doesn’t qualify for a refund, doesn’t make enough to earn a Social Security credit, and doesn’t want to open a retirement account, learning how the tax system works is important enough to justify the effort.
Take Advantage Of Student Tax Credits
As a college student, you are eligible for several education tax credits that can help lower your taxes. Two popular education credits include theAmerican Opportunity Credit andLifetime Learning Credit.
The American Opportunity tax credit lets you claim up to $2,500 per tax return for qualified education expenses related to your undergraduate education. For example, your tuition and fees for college count as qualified expenses.
The Lifetime Learning Credit also lets you claim 20% of the first $10,000 of college tuition and fees paid during the year, which works out to be a maximum credit of $2,000.
It is important to note that these two credits cannot be used at the same time.
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Do College Students Need To File Taxes
College students filing their tax return for the first time should be aware of certain items before submitting their return.
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.
Learn How To File Your Taxes For Free
Yes, there is such a thing as free tax filing. In fact, the IRS offers a program calledFree File that lets you file a tax return for free using commercial software.
You can also get free tax help and use free editions of online tax filing software from companies like . Using this online software, you can file a basic tax return for free.
If youre looking to save some money, these free online tax software are great options. Just be sure to read the fine print beforehand, as there are some restrictions on who can use them.
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What About Scholarships
While scholarships are not taxable income, if students used scholarship money for anything other than tuition, they have to report that money as taxable income, according to Armine Alajian, a certified public accountant at the Alajian Group.
If you have a scholarship, you have to report any portion of that scholarship that you used for anything apart from tuition, fees, books and supplies, Alajain said. If you used part of the scholarship money for room and board, for example, report that portion as taxable income on form 1040.
The Aotc Might Pay You
One more excellent perk of the American Opportunity Tax Credit: The $2,500 credit is refundable, meaning that if you owe less than $2,500 in taxes, youll get a refund in the amount of the difference.
If youre eligible for the Lifetime Learning Credit and the American Opportunity Credit for the same student in the same year, you can only choose one credit, but not both.
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How Much Money Did You Make Last Year
Student or not, everyone must file a federal tax return if they make over a certain amount of income. The Internal Revenue Service uses different measures for calculating income. To find out if you have to file taxes, you’ll need to know your:
- Earned Income: What you earn at a job plus any taxable scholarships
- Gross Income: Your earned income plus any other payments you receive, like from tips or dividends on investments
Single students under 65 generally must file taxes if their gross income was at least $12,550.
Can You Be Considered Someone’s Dependent
Dependents have different income thresholds for filing taxes. Let’s say you are a single, dependent student and not blind. Then, you need to file a tax return if:
- Your earned income exceeds $12,550.
- Your gross income exceeded $1,100 or your earned income plus $350 whichever is higher.
That threshold is higher if you’re blind. It’s lower if you made money with a self-employed gig. Self-employed dependents who made more than $400 must file a tax return. Keep reading below to learn if you qualify as someone’s dependent.
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