The Complete Guide to Tax Season for College Students

By Jeff Smith

Filing your taxes can seem daunting — especially if you’re doing it for the first time. Maybe you’re unsure of the documents you need or which deductions you can claim. But with the right tools and information, filing your taxes can be straightforward and seamless. In fact, most college students have simple tax returns that can be filed for free.

To help you file thoroughly and accurately, we’ve put together a comprehensive tax guide. We cover how to determine your filing status, gather the right forms, deduct education expenses, and claim tax credits.

Many college students receive a tax refund every year that they can spend on education or living expenses. If you start the filing process early, you’ll have plenty of time to maximize the amount of your return. And with more personal finance and tax knowledge, you’ll be on your way to increased financial stability and independence.

Table of Contents

• Determining Your Filing Status
• Collecting the Necessary Forms
• Deducting Education Expenses
• Claiming Tax Credits
• Other Considerations
• Additional Resources
• Checklist

Determining Your Filing Status

When you begin your tax return, one of the first things you’ll want to figure out is your filing status — which is based on your family situation and whether or not you’re married. Why does filing status matter? It directly impacts:

• Your tax bracket
• The total amount of taxes you’ll pay
• Your filing requirements
• Which deductions you can claim.

There are two main options for filing as a college student: dependent and independent. In most cases, college students file as a dependent.

Filing as a dependent means another person, like your parent or guardian, can claim a dependency exemption (tax break) for you. Even if you’re paying your way through college, you may still have to file as a dependent because you may not meet the legal requirements of being independent.

To file as an independent, you must meet certain criteria, such as being married or having a child, being at least 24 years old, or working on a degree beyond a bachelor’s.

Check with your parent or guardian to make sure you’re on the same page when filing. If they plan to claim you as a dependent, you’ll need to file as a dependent. If your parent or guardian won’t be claiming you, you may still need to file as a dependent based on if you meet the legal definition of independent.

Collecting the Necessary Forms

Having all of the proper documents and forms at your disposal when filing your taxes will make the entire process much smoother. With the right information at your fingertips, you’ll have accurate numbers to input into your tax forms or e-filing program. The deadline for sending out tax forms is January 31, meaning you should have everything in your possession by early February.

Many of the forms you’ll need come from your employer — whether that’s the university bookstore or a local restaurant. Some forms can be accessed online, depending on your employer, while others will come via mail.

Be sure to keep your college address up-to-date with your employer, so your important documents don’t get lost in the mail. You’ll also want to have your parents keep an eye out for your forms. For instance, if you work a summer job in your hometown, your documents might get sent to your parents’ address instead of your college address.

The main forms you’ll need to file your taxes depend on the type of job you have. Review the list below to make sure you have all the right forms.

• W-2: For a traditional full or part-time job: Provides wage and income information along with the amount of taxes withheld from your paychecks for the year
• 1099: For a freelance, contract job, or gig: Reports self-employed and independent contractor earnings
• 1098-T: For expenses paid to the college: Lists qualified expenses such as tuition, enrollment fees, and course materials along with any scholarships and grants
• 1098-E: For student loan interest: Reports interest of $600 or more paid to a student loan lender
• 8863: To see if you qualify for education credits: Fill out the 8863 form to calculate the amount of credit you can claim
• Other miscellaneous income records:
• Interest or dividend income (1099-DIV, 1099-INT, 1099-OID)
• Income from the sale of stock or property (1099-B, 1099-S)
• Royalty income (1099-Misc.)
• Gambling income (W-2G)
• Unemployment (1099-G)
• Rental income
• Jury duty records
• Awards or prizes
• Hobby income records
• Trust
• Any other 1099s received

Deducting Education Expenses

To reduce your taxable income — and ultimately the amount of taxes you owe — you can deduct certain educational expenses, such as tuition and enrollment fees. For example, in addition to your tuition, you can claim things like a freshmen orientation fee or a chemistry lab fee. Expenses that don’t qualify include room and board and student health fees.

There’s a limit to deducting education expenses, though. You or your parent can deduct up to $4,000 per year. If you deduct education-related expenses, you won’t be able to claim a tax credit in the same year for the same student. For instance, if you deduct $3,000 of tuition expenses, you wouldn’t also be able to claim the Lifetime Learning Credit. It’s also important to know that if you file as a dependent, you can’t claim education expenses, but your parents or guardian can.

In addition to expenses, you can deduct the amount of student loan interest you paid during the year if you meet certain criteria, such as if you’re legally obligated to pay interest on a student loan. You can deduct up to $2,500 per year. A student loan interest deduction works as an adjustment to income, so it will reduce the overall amount of taxes you pay. Whether your loans are federal or private, you can still qualify for the deduction.

If you receive scholarships and grants, those could impact your taxes too. For example, Pell grants and student loans don’t qualify as income and grants used for education expenses aren’t counted as income, either.

Scholarships may be taxable or tax-free. A scholarship is tax-free when it’s used to cover tuition, fees, books, or supplies — and you’re a part or full-time student pursuing a degree. A scholarship is taxed when it’s used to cover room and board, travel, research, clerical help, or books and supplies not required for the course.

Claiming Tax Credits

As a college student, you may be eligible to claim certain tax credits that reduce the overall amount of taxes you owe to the IRS. Two main tax credits are available: the American Opportunity Tax Credit and the Lifetime Learning Credit.

The American Opportunity Tax Credit is a credit of up to $2,500 per year for qualified education expenses paid by a student in their first four years of higher education. You must be working toward a degree or credential and be enrolled at least half-time for one academic period in the tax year. If your credit exceeds the amount of tax you owe, you can receive up to $1,000 as a refund. Your credit can be applied to tuition costs, fees, and other supplies and books.

The Lifetime Learning Credit is a credit of up to $2,000 per year for qualified tuition and related expenses that are paid for by students enrolled in an educational institution. Undergraduate, graduate, and professional degree students are eligible, along with individuals taking courses to acquire job skills. Students must be enrolled in at least one course during the tax year.

In addition to your federal tax return, you may be able to apply other educational tax credits or deduct certain expenses through your state. For instance, there is a Michigan Education Savings Program Deduction and in North Dakota, a College SAVE Deduction option. Check with your state to see if they offer any additional tax breaks for students.

Other Considerations

If you’re like most college students, your employment and tax situation should be relatively straightforward. Instead of hiring an accountant, you can file your taxes for free and achieve the same great results. The IRS suggests several options for filing for free online. Sometimes you can also find tax software programs with a free option.

For tax preparation assistance, your college or university might provide free services. Your local library or community center may also offer free tax preparation advice.

When looking for help to prepare your taxes, you want to be aware of potential scammers and identity thieves. Many identity thieves know that college students are early in their adulthood and, therefore, are more susceptible to certain scams.

If you’re looking for tax help, make sure you are the one seeking out an individual or company. If you’re the one being sought out by someone else, don’t send secure information or even respond unless you already know who it is and you can verify who they are. You can go to the company’s website or make a phone call to confirm the identity and nature of the people who contacted you. Simple steps — like verifying their identity or sending your tax forms over a secure system — could save you hundreds of hours and dollars.

Because college students generally have simple tax returns, we suggest handling the filing on your own and filing for free. Keep this tax guide handy (and share it with any friends) to make the most of your return.

By taking control of your tax preparation, you’ll gain a solid understanding of how much you’re making and how much tax you’re paying. With more tax knowledge and filing experience, you can feel confident in your own financial standing and wellbeing.

Additional Resources

Here is a list of resources to help you file your taxes as seamlessly as possible.

Education Tax Break Guide

Free Filing Software

H&R Tax Center

IRS Tax Preparedness Series

Tax Information for Students

TurboTax Blog

USA.gov

Volunteer Income Tax Assistance (VITA) program

Checklist:

Sources:
Fastweb | Forbes | H&R Block | H&R Block | IRS | IRS | IRS | IRS | IRS | ITEP | Simple Tuition | The College Investor | TurboTax | TurboTax | TurboTax | USA Today

About the Author

Jeff Smith is the VP of Marketing at Self.