5 Tips Every College Student Should Know Before Filing Taxes
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It may seem daunting to navigate filing your income taxes as a college student, especially while juggling classes, a job, and student loans.
Filing your taxes also comes with its own set of unique challenges with questions like…
- Do I even have to file my taxes?
- What is my dependency status? (and what does that even mean?)
- Did I fill out my W-2 correctly? (speaking from personal experience, this one is still tricky well into your late 20’s!)
You may get advice from friends or family when it comes to doing your taxes, but if you still need some guidance on how to get started, here are 5 tips designed to make filing your taxes a little easier while hitting the books.
1. Research what tax forms you’ll need.
When you file your taxes, there are a few key documents you’ll need handy:
- W-2: If you received a paycheck at any point during the calendar year (i.e. including on or before December 31st), you should receive a W-2 from your employer, usually by mail however sometimes online. This document contains any taxes that were withheld from your paycheck. The IRS requires employers to send out W-2’s by the end of January each year, so if you don’t get them in the mail by the first week of February, contact your employer for a paper or digital copy.
- Student Loan Interest Statement (Form 1098-E): This document helps you deduct any interest you paid on a student loan during the tax year. Your lender should send you this form if you paid over $600 in interest.
- Tuition Statement (Form 1098-T): Your school should provide this form. This tuition statement includes all the information you’ll need to report to claim education credits. This includes tuition paid and related expenses, scholarships, grants, and any adjustments from the previous year.
- Form 8863: This form indicates whether you qualify for education credits (see tip #2 below), including the American Opportunity Tax Credit and the Lifetime Learning Credit (we’ll dive into this in the next section).
2. Look for extra credits and deductions.
Did you know that education credits can save you money? Education credits are different from the credits you earn at school. An education credit helps with the cost of your education by reducing the amount of taxes you owe.
The first credit you should look into is the American Opportunity Tax Credit (AOTC). Specifically designed for filing taxes as a college student, this annual credit is worth up to $2,500, and eligible students can claim it during the first four years of undergraduate studies. The credit helps cover the cost of qualified education expenses such as tuition, fees, books, supplies, and any equipment. As a bonus, if the credit reduces the amount of tax you owe to $0, 40% of any remaining amount is refunded to you (that could be up to $1,000)!
Another helpful tax benefit is the Lifetime Learning Credit (LLC). Students enrolled in an eligible educational institution can claim a maximum of $2,000 if they are in undergraduate, graduate, or professional degree courses.
Keep in mind, you can’t use the same expenses for more than one tax benefit (like laptops, iPads, or other technologies), and you aren’t able to claim both credits in the same year.
3. Know your dependency status.
Time to pick up the phone and call (or text) Mom and Dad. Why? Your parents can claim you as a dependent on their tax return if you’re a single full-time student up to 24 years old. What is a dependent and why can they claim you? A dependent is a “qualifying child or relative” who has lived with someone for more than half the year and their parents provided the majority of their financial support.
But, if you’re paying your own way through college, make sure to have a talk with your parent(s) about not claiming you, so you can take advantage of tax breaks on your own tax return.
4. Apply for private scholarships.
Not only do scholarships provide you with free money to help pay for college, but they are also (usually) tax-free. This means they won’t be included as taxable income (unlike the money you would earn from a job) when it’s time to calculate your tax return.
Searching for new scholarships? Enter to win Ascent’s Student Scholarship on Instagram! It’s a monthly sweepstake that’s just three simple steps and there’s no essay required. If you win, it’s a bonus for you and your wallet.
5. Don’t pay to file your tax return.
As a full-time student, you might not need to file a tax return. However, if you had a summer job, entered a work/study program at school, or are enrolled in classes part-time, that may not be the case. If you need a little more help, use this tool from the IRS to determine if you’re required to file.
If you end up needing to file, there are likely alternatives to paying someone to do your tax return for you. There are plenty of options to file online with free platforms like Credit Karma Tax, TurboTax (which has a “For Students” section that helps you figure out your education credits and deductions), or H&R Block.
If you’re not comfortable doing it solo and want to avoid any mistakes, try looking up a Volunteer Income Tax Assistance program in your area that can help you prepare and file your taxes for free.
Don’t worry; you’re not alone. So many college students get nervous about filing taxes. But, with the right information and forms, filing taxes as a college student doesn’t have to be intimidating. Understanding how you can maximize your tax refund can be empowering while hopefully putting a little more money in your pocket during tax season.
