As a college student, this might be the first time you're asked about filing taxes because you're earning some sort of taxable income. However, not everyone needs to submit a tax return, and it may be optional for you too.
Common Tax Terms You Might Come Across
Before we start answering your questions, let's cover the basics.
Federal income tax is collected by the federal government and used towards government services. The IRS imposes the federal tax, and you use their form 1040 to report your income taxes.
State income tax is regulated by the state your income came from or where you reside. Official forms to file state taxes depend on the state (and sometimes county) you're in and can be found on the state's website or local tax office.
Most students fall into this category as their taxable income is under $100,000, and they do not have dependents. It's also the easiest to e-file.
In its basic form, taxable income is the pay you receive for a service you perform, including a salary, tips, active duty pay. You can be paid through an organization or self-employed and still receive a taxable income. Aid you receive to attend a higher education institution, such as financial aid like FAFSA, paid research, or teaching, may also fall under this category.
This is the dollar amount that reduces the amount of your taxable income. For the 2020 tax year, this amount is $12,400.
How Do You File a Tax Return?
Can you file your own taxes as a college student?
What if you have a spouse?
If you were married before the last day of the tax year, you could file taxes together. Certain deductions and credits are only available if you file jointly. You can use tax software or stop by a tax preparation company before you officially file to see whether married filing independently or jointly is better for your situation.
What documents do you need to file taxes?
Personal information such as social security number, name, date of birth, routing, and account number that you can pay from or receive payment. Proof of income such as a W-2 if you're employed or 1099-G if you're unemployed and receiving unemployment. If you're self-employed or receiving income through rentals you have or other sources, related documents will be helpful. 1098-E or 1098-T will help you get through your tax form's standard deduction and educational expenses section.
What's a standard deduction?
This is the dollar amount that reduces the amount of your taxable income. For the 2020 tax year, this amount is $12,400
Why do you need a routing and account number to file taxes?
After providing all the tax information the form requires, you'll either owe money or be eligible for some money back. You can choose to pay the taxes you owe or receive the excess money through a check, but you can just as easily link your bank account to take care of the payments automatically.
When should you file?
The federal income tax filing deadline is usually April 15th. Essential documents such as the W-2 and 1098-T may be available on or before January 31st.
Do You Need to Submit a Tax Return for 2020?
Do you fit all these criteria? Are you:
- Under the age of 65?
- Earning less than $12,400 during 2020?
- Not running a small business (or fulfill any other special requirement)?
If you answered "yes" to all of the above, you might not need to file this year. If you answered "no" to any of the options above, you will need to submit a tax return.
Are you a dependent?
You're considered a dependent if you're under 24, lived with your parents for over six months in the 2020 tax year, and didn't provide more than half of your own support for the year. If you're a dependent, you'll need to file a return if you earned over $12,400
What if you're an international student?
International college students who fall under nonresident aliens do not have to file state tax. However, if you receive a taxable income, including through a fellowship or scholarship, you may have to file a federal tax return. If your gross income is solely provided by foreign sources or other tax-free local sources, you are exempt from filing.
What Tax Breaks Do College Students Receive?
Are there benefits if you're a college student?
The government offers tax credits and deductions for qualifying students through the American Opportunity Tax Credit (AOTC), Life Learning Tax Credit (LLTC), Student Loan Interest Deduction (SLID), or Earned Income Tax Credit (EITC).
What benefits can you receive under AOTC?
You can claim up to $2,500 as tuition and fees deduction, or even books and supplies. If the expenses are required for enrollment or attendance, you may be able to include them in your credit.
Who is eligible for AOTC?
Independent students or parents of dependent students who are actively pursuing a degree on at least half/part-time for one academic term (e.g., one semester) can apply for AOTC. Your (or your parent's) gross income should be $90,000 or less, and the filer should not have been convicted of any drug felonies.
What can the Lifetime Learning Tax Credit provide?
Lifetime learning credit can reduce your tax bill up to $2,000 for every year that you qualify. Like AOTC, you can include tuition, fees, and course supplies for credit. Unlike AOTC, LLTC allows undergraduates, graduates, and professional education students to qualify.
How can the EITC help you?
EITC is a refundable tax credit that caters to those who earn a small income during the tax year – perfect if you have a part-time job while you're a student.
What is the Student Loan Interest Deduction?
Many students rely on student loans to help them finance their academic careers. Interest rates on those loans climb exceptionally quickly, making the loan much more expensive than you may have signed up for. You can claim a student loan interest tax deduction to lower or completely deduct the loan's interest rate. An eligible loan is one that covers a qualified education expense like tuition or housing.
How do you file for a SLID?
You'll need your IRS form 1098-E from your student loan lender that will show how much you paid for that loan. Just enter this number on line 20 of your IRS form 1040 before submitting it.
It's a document the IRS sends to your mailbox (in person or online) that you use to determine your student loan interest deduction. This differs from Form 1098-T, which contains most of the income tax information you need, like education credits you may qualify for.
You Just Submitted All Required Forms - Now What?
Once your forms are accepted, it's on the IRS's payment timetable. Only the IRS knows the status of your tax return, whether you owe or need a refund. Even tax software companies can give you an approximate timeline based on previous processing dates.
However, you can track your refund once it's been approved. The IRS has a "Where's My Refund" page to do just that. It can take up to 72 hours after filing to be uploaded onto the page. Have all your information ready before visiting the page, including the whole dollar amount of your tax refund. If you owe money, just enter $1 for the refund amount.