Douglas Olsen
College students often have many questions when it comes to filing taxes, especially if they are early in their adulthood. While being a college student does not automatically require you to file taxes, there are certain criteria that dictate whether you need to. These include your income, whether you are a dependent, and your marital status. College students may also be eligible for certain tax benefits, such as tax credits and deductions, which can make the process more advantageous.
| Characteristics | Values |
|---|---|
| Who needs to file taxes? | Generally, college students who are single and earned more than $14,600 in 2024 must file an income tax return. |
| Who can be claimed as a dependent? | Parents can typically claim their college student as a dependent if the student is under 19, or under 24 and a full-time student, and the parent provides more than half of the student's financial support outside of any scholarships earned. |
| What forms are needed? | W-2 or 1099, Form 1098-T, Form 1098-E, Form 8863, Form 1040 (for international students), Form 1042-S, Form 8843, Form 1095-C, and Schedule C and Schedule SE (for self-employment income). |
| Are there any tax benefits for college students? | Yes, there are tax credits and deductions that may apply, such as the Tuition and Fees Deduction, the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit, and loan interest deductions. |
| What if a student doesn't make enough money to file taxes? | Even if a student doesn't make enough money to file taxes, they may still want to file a return if their employer withheld income taxes from their paychecks, as they may be entitled to a tax refund. |
| Are scholarships and grants considered taxable income? | Scholarships and grants are typically tax-free, but there may be situations where they need to be included as taxable income. |
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What You'll Learn
Income thresholds for filing taxes
The income thresholds for filing taxes for college students depend on several factors, including their filing status, whether they are claimed as dependents, and their income sources. Here is some information on income thresholds for filing taxes for college students:
Dependent Students:
Dependent students must consider their earned and unearned income when determining their filing requirements. Earned income typically includes wages from employment, while unearned income includes items such as interest, dividends, and income as a beneficiary. If a student is claimed as a dependent by their parents, their filing threshold may be impacted. For example, in 2024, a dependent student needed to file a tax return if their earned income exceeded $14,600. However, if their unearned income was greater than $1,300, or their self-employment income was more than $450, they also needed to file a return. These thresholds can vary from year to year, so it's important to refer to the latest guidelines provided by the Internal Revenue Service (IRS).
Single and Married Students:
The income threshold for filing taxes also depends on the student's marital status. Single students under 65 generally need to file taxes if their gross income exceeds a certain amount, which was $14,600 in 2024. On the other hand, married couples have different thresholds depending on whether they file jointly or separately. For example, in 2025, married couples filing jointly needed to file taxes if their combined income reached $29,200, while those filing separately needed to file if they made $5 or more.
Self-Employment Income:
Students with self-employment income may have different filing thresholds. For example, self-employed dependent students who earned more than $400 were required to file a tax return. Students with self-employment income may need to include additional forms, such as Schedule C and Schedule SE, when filing their taxes.
Tax Benefits and Deductions:
It's important to consider tax benefits and deductions that may impact the amount of taxable income for college students. For example, students can typically deduct student loan interest payments, and scholarships and grants are often tax-free. Additionally, students with part-time or full-time jobs may be eligible for a refund even if they are not required to file a tax return, as their employers may have withheld federal and state taxes from their paychecks.
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Dependents and tax returns
The Internal Revenue Service (IRS) defines a dependent as a qualifying child or relative who relies on you for financial support. A dependent must be your son, daughter, stepchild, eligible foster child, brother, sister, half-sibling, stepbrother, stepsister, adopted child, or the child of one of these; be under the age of 19 or under 24 if a full-time student; live with you for more than half the year; get more than half of their financial support from you; and not file a joint tax return.
A dependent can't claim a dependent on their own tax return. However, a dependent may still need to file their own tax return, depending on their income, marital status, and other criteria. For instance, a dependent must file a tax return if their unearned income (including interest and dividends, unemployment compensation, and income as a beneficiary of a retirement plan) is greater than $1,300, or their self-employment income is more than $450.
If a dependent's parents claim them as such, they may be eligible to take the American opportunity credit during their child's first four years of postsecondary education. Additionally, parents can use IRS Form 8814 to report their child's income on their tax return instead of the child filing a separate tax return. The first $1,300 of the child's income isn't taxed, but the next $1,300 may be taxed at up to 10%.
College students may want to file a tax return even if it's not a requirement. If a student's wages are less than $14,600, they can file a return to receive refunds from federal and state withholding taxes.
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Tax benefits for higher education
Whether or not university and college students need to file taxes depends on their income and whether they are claimed as dependents. Students who are single and earned more than $14,600 in 2024 must file an income tax return. Students who earned less can still file a return to get a refund of taxes withheld by their employer.
There are several tax benefits available for higher education, which can help lower the tax owed. These include:
Tax Credits
The American Opportunity Tax Credit (AOTC) is a refundable credit that provides a maximum annual credit of $2,500 per eligible student during the first four years of college. It covers expenses associated with tuition, fees, and course materials. To qualify, students must be pursuing a postsecondary degree or recognised education credential and be enrolled at least half-time for one academic term.
The Lifetime Learning Credit (LLC) equals 20% of the first $10,000 of qualified education expenses, up to a maximum of $2,000 per tax return. Income thresholds for the LLC are restrictive, with a modified adjusted gross income requirement of between $80,000 and $90,000 ($160,000-$180,000 for joint filers).
Tax Deductions
The student loan interest deduction allows taxpayers to deduct required or voluntary interest paid (up to $2,500) on a qualified student loan for higher education costs.
Savings Plans
A Coverdell Education Savings Account (ESA) is a tax-free savings account that can be used to pay for qualified higher education expenses. The total contributions for the beneficiary of this account cannot exceed $2,000 per year, and the beneficiary must be under 18 or a special needs beneficiary. While contributions are not deductible, the accumulated earnings grow tax-free until distributed, provided they are used for qualified education expenses.
Exclusions from Income
Certain educational assistance benefits, such as scholarships and grants, can be excluded from taxable income. However, this means that you cannot claim any deductions or credits on the same expenses.
IRA Funds
While the IRS usually charges a 10% penalty for early withdrawal of IRA funds, this penalty is waived if the funds are used for qualified higher education expenses. However, income tax may still be owed on the distribution.
It is important to consult with a tax professional or refer to the IRS website for the most up-to-date and accurate information on tax benefits for higher education.
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Tax refunds for students
Whether or not a college student needs to file taxes depends on their income and whether their parents can claim them as a dependent. Students who are single and earned more than $14,600 in 2024 must file an income tax return. Students who earned less can still file a return to get a refund of taxes withheld by their employer. Students may also be eligible for tax benefits for higher education, such as loan interest deductions, credits, and tuition programs, which can lower the tax they owe.
College students may be entitled to tax refunds if they had their employers withhold income taxes from their paychecks. Even if a student's income is less than the threshold for filing taxes, they can still file a return and claim a refund. Students can generally file their taxes for free if they have a straightforward return and an adjusted gross income of $84,000 or less.
Students may also be eligible for education credits, such as the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), which can help pay for qualified education expenses during the first four years of higher education. The AOTC can provide a maximum annual credit of $2,500 per eligible student, and if it reduces the tax owed to zero, up to $1,000 of the remaining credit can be refunded. To claim the AOTC, students must complete Form 8863 and attach it to their tax return. They may also need to include Form 1098-T, which shows the tuition paid, and Form 1098-E, which reports any student loan interest payments.
In addition to education credits, parents who claim their student as a dependent may be able to take the American opportunity credit for college tuition during the first four years of postsecondary education. It is important to note that there are specific requirements and rules for claiming these credits, so students and parents should review the eligibility criteria carefully.
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Forms for international students
International students in the USA are required to file a tax return. The type of visa an international student holds will determine their residency status for tax purposes, and consequently, the type of tax they are required to pay.
F-1 Visa
Students with an F-1 visa are considered nonresident aliens for tax purposes. They are exempt from paying employment taxes, such as Social Security and Medicare (also known as FICA), but are required to pay federal and state income taxes. They must fill in a W-4 tax form with their employer when they start work. If they receive income from an OPT (a program that allows international students to work in the US after graduation), they will be taxed.
As a nonresident alien, international students with an F-1 visa will need to file Form 1040-NR (federal tax return) to assess their federal income and taxes. They will also need to file Form 8843 with the IRS, which is an informational form that lets the IRS know how long they have been in the USA. Even if they do not earn money during their time in the USA, they will still need to file Form 8843. They may also be required to file a state tax return, depending on the state.
J-1 Visa
International students with a J-1 visa are required to pay income taxes on the income they earn, including federal, state, and local taxes.
M-1 Visa
Holders of an M-1 visa are generally not taxed because they are in the USA only to learn and therefore do not earn any income. However, they may be required to file income tax in rare situations where they are paid for practical training.
Tax Treaties
It is important to note that some countries have a tax treaty with the USA, and international students from those countries may be exempt or have a reduced tax rate.
Social Security Number or Individual Taxpayer Identification Number
International students may need to use a Social Security Number (SSN) on various tax forms. If they worked in the USA and received taxable employment compensation, they must apply for an SSN with the Social Security Administration. If they are not eligible for an SSN, they must apply for an Individual Taxpayer Identification Number (ITIN) from the IRS to use on forms.
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Frequently asked questions
It depends on their income and whether they are claimed as a dependent. Generally, a parent can claim their child as a dependent until age 19, but if the child is a full-time student, they can claim them as a dependent until age 24.
The income threshold depends on multiple factors, including whether the student is a dependent, married, or single. If you are a single student who made more than $12,950, you will likely have to file a tax return. The threshold is $14,600 for married students, heads of households, or those over 65.
There are several tax benefits available to college students, including the Tuition and Fees Deduction, the American Opportunity Tax Credit (worth up to $2,500 per year), and the Lifetime Learning Credit (worth up to $2,000 per year). Students can also deduct interest paid on student loans from their taxes.
College students will need to gather several documents to file their taxes, including W-2s or 1099s reporting income and taxes withheld, Form 1098-T for tuition payments, and Form 1098-E for student loan interest payments. International students may need to complete additional forms, such as the 1042-S to report income and the 8843 to report zero U.S. income.
