Janice Lozano
Whether or not a full-time student has to pay federal income tax depends on their income level and whether they are claimed as a dependent. If a student's income is below the filing requirement for their age, filing status, and dependency status, they do not owe federal income tax. Students who are claimed as dependents on their parents' tax returns are generally not eligible to claim education credits, but their parents may be able to do so. Students who work may still be required to file a tax return if their employer withheld income taxes from their paychecks, but they can receive refunds.
Does a full-time student pay federal income tax?
| Characteristics | Values |
|---|---|
| Exemption from federal income tax for full-time students | No |
| Filing federal income tax return requirement | If income is above the filing requirement for age, filing status, and dependency status |
| Self-employment income | File a return if earned more than $400 and pay 15.3% FICA taxes |
| Income tax withholding refund | Can file a return to receive a refund |
| Education deductions and credits | May be eligible for loan interest deductions, qualified tuition programs, and education savings accounts |
| Parents claiming dependents | Parents can claim a full-time student as a dependent until age 24 |
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What You'll Learn
Full-time students are not exempt from federal income tax
The factors that determine whether you owe federal income taxes or must file a federal income tax return include the amount of your income (earned and unearned), whether you can be claimed as a dependent, your filing status, and your age. If your income is below the filing requirement threshold for your age, filing status, and dependency status, you will not owe income tax on that income and will not have to file a tax return.
Even if you are not required to file an income tax return, you may choose to do so if you are entitled to a refund of withheld income tax or if you are eligible for a refundable credit. For example, if you worked a part-time or full-time job during the year and had federal and state withholding taxes taken out of your pay, you can file a tax return to receive a refund. Additionally, if you have student loans or pay education costs, you may be eligible to claim education deductions and credits on your tax return, such as loan interest deductions, qualified tuition programs, and education savings accounts.
It is important to note that if your employer considers you an independent contractor or self-employed, you are typically responsible for paying your own income tax and self-employment tax. In this case, you may need to make estimated tax payments throughout the year to cover your tax liabilities.
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Filing requirements are based on age, income, and dependency status
Every U.S. citizen or resident must file a U.S. income tax return if certain income levels are reached. If you are a full-time student, your income may not reach those levels. However, your status as a full-time student does not exempt you from federal income taxes. Filing requirements are based on age, income, and dependency status.
If you are a dependent on your parents' tax returns, you are generally not eligible to claim education credits. In this case, your parents may be able to claim these deductions and credits. Your parents can claim you as a dependent until the age of 19, but if you are a full-time student, they can claim you as a dependent until the age of 24. Other requirements include how much financial support your parents provide. For example, a full-time student is generally considered a dependent if they are under 24 and do not provide more than half of their financial support.
If your income is below the filing requirement for your age, filing status, and dependency status, you do not owe income tax and are not required to file a tax return. However, you may choose to file a tax return if you are entitled to a refund of withheld income tax. For example, if you worked a part-time or full-time job and your Form W-2 shows federal and state withholding, you may qualify for a refund. Additionally, if you have student loans or pay education costs, you may be eligible to claim education deductions and credits on your tax return, such as loan interest deductions and qualified tuition programs.
If your employer has not withheld federal income taxes, Social Security, or Medicare from your pay, they may be treating you as an independent contractor or self-employed person. In this case, you are responsible for paying your own income tax and self-employment tax. You may need to make estimated tax payments throughout the year to cover your tax liabilities.
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Self-employed students must pay self-employment tax
There is no exemption from tax specifically for full-time students. Every U.S. citizen or resident must file a U.S. income tax return if certain income levels are reached. If you are a full-time student, you may not be working full-time and may not reach those income levels. If your income is below the filing requirement for your age, filing status, and dependency status, you will not owe income tax on that income and will not have to file a tax return. However, if you had tax withholding, you may choose to file a tax return if you would like to receive a refund.
If you are a self-employed student, different rules apply. If your income is from self-employment, you would generally have to file a return if you earned more than $400 and pay the 15.3% FICA taxes. For example, if you are a college student who earns money from tutoring online, you would need to pay self-employment taxes. You will report your business income and ordinary and necessary business expenses on Schedule C. You will compute your self-employment tax on Schedule SE. You'll file Form 1040, on which you report the Schedule C profit (or loss) and your self-employment tax liability.
As a self-employed person, you are liable for the full amount of FICA and Medicare payments, whereas if you were an employee, you would typically pay half, and your employer would pay the other half. Part of the self-employment tax is a deduction that can help lower your federal income tax. You may also need to make estimated tax payments, which are generally due on April 15, June 15, September 15, and January 15 of the following year. You can use Form 1040-ES to estimate your self-employment and income tax liabilities.
If you are a dependent on your parents' tax returns, your parents may be eligible to claim education deductions and credits for any student loan interest deductions or qualified tuition programs that you may be paying.
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Students can file taxes to receive refunds
Whether or not a full-time student needs to pay federal income tax depends on their income level. In 2023, anyone who earned less than $13,850 did not have to pay federal income tax unless it was self-employment income. If it was self-employment income, then a tax return must be filed if the income was over $400, and the individual must pay 15.3% FICA taxes.
Students can file their taxes for free using most tax filing software, such as H&R Block or TurboTax. They can also receive free help through the IRS Volunteer Income Tax Assistance program, which may be available on campus or in the community. Filing taxes can help students unlock potentially thousands of dollars in tax credits and benefits, so it is recommended that students file taxes every year, even if they are not required to.
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Students can claim education deductions and credits on tax returns
There is no exemption from tax for full-time students. Every U.S. citizen or resident must file a U.S. income tax return if certain income levels are reached. However, if you are a full-time student, you may not be working full-time and may not reach those income levels. If your income is below the filing requirement for your age, filing status, and dependency status, you will not owe income tax on the income and will not have to file a tax return.
Students who have student loans or pay education costs for themselves may be eligible to claim education deductions and credits on their tax returns. These include loan interest deductions, qualified tuition programs (529 plans), and Coverdell Education Savings Accounts. Students who are dependents on their parents' tax returns are generally not eligible to claim these credits. In this case, the student's parents may be eligible to claim the education deductions and credits.
The American Opportunity Tax Credit (AOTC) is a tax credit that can help to defray the costs of higher education expenses for tuition, certain fees, and course materials for up to 4 years. To be eligible for the AOTC, you must take at least half of the full-time course load for the first four years of college. You can claim the credit for up to four tax years, and it is worth up to $2,500 of the cost of tuition, certain required fees, and course materials needed for attendance and paid during the tax year. To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married taxpayers filing jointly). If your MAGI is over $90,000 ($180,000 for married taxpayers filing jointly), you cannot claim the AOTC.
To claim the AOTC, you must use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits). The law requires you to include the school's Employer Identification Number (EIN) on this form. Most students must have received a Form 1098-T, Tuition Statement, from an eligible educational institution to claim the AOTC. This form reports amounts paid for qualified tuition and related expenses and may be useful in calculating the amount of allowable education tax credits.
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Frequently asked questions
Being a full-time student does not exempt you from federal income taxes. If your income is below the filing requirement for your age, filing status, and dependency status, you don't owe federal taxes on your income and are not required to file a federal income tax return.
For 2023, anyone who earns less than $13,850 does not have to pay federal income taxes as long as it is not self-employment income. If it is self-employment income, you would have to file a return if you earned more than $400 and pay 15.3% FICA taxes.
If you had taxes withheld from your paychecks, you can file returns and get refunds. You may be able to get a refund even if you aren't required to file.
If you are a dependent on your parents' tax returns, you are generally not eligible to claim education credits. In this case, your parents may be able to claim the education deductions and credits.
You may be able to get free tax help from the IRS Volunteer Income Tax Assistance program, which might be available on your campus or in your community. You can also work with an in-person or online tax preparation service, such as H&R Block or Jackson Hewitt Tax Services.
