Do College Students Have to File Taxes?

As a college student, your tax obligations are influenced by your income level and whether you can be claimed as a dependent by a parent or guardian. These factors determine if you must file a tax return and what tax benefits you might be able to claim. Unique financial situations, like receiving scholarships and grants or having part-time employment, create a distinct set of rules that students must consider.

Determining Your Filing Requirement

A primary factor in determining if you need to file a tax return is your dependency status. The IRS has specific tests based on age, residency, and financial support to determine if a parent can claim a student as a dependent. This is common for full-time students under the age of 24. Being a dependent means the income thresholds for filing a return are lower than for an independent individual.

For dependent students, the requirement to file is based on both earned and unearned income. Earned income includes wages, while unearned income can be from investments or taxable scholarship funds. For the 2024 tax year, a dependent must file if their gross income was more than the larger of $1,300 or their earned income (up to $14,150) plus $450. This means a modest amount of other income could trigger a filing requirement.

Students who cannot be claimed as a dependent have a simpler rule. For the 2024 tax year, a single individual under age 65 must file a tax return if their gross income was $14,600 or more. This figure represents the standard deduction for a single filer. Even if your income is below this level, filing a return can be beneficial if you had federal income tax withheld from your paychecks, as you may be due a refund.

Information and Forms to Gather

Before preparing a tax return, you must collect all necessary financial documents. For students with part-time jobs or work-study programs, the most common income document is Form W-2, Wage and Tax Statement, which your employer is required to send by the end of January. If you performed freelance or gig work and were paid $600 or more by a single client, you should receive a Form 1099-NEC.

A document for students is Form 1098-T, Tuition Statement, provided by your college. This form reports the amount you paid for qualified tuition and related expenses in Box 1 and the total amount of scholarships or grants you received in Box 5. This form is used for determining your eligibility for education-related tax benefits.

Scholarships and grants are tax-free if you are a degree-seeking student at an eligible educational institution and the funds are used for qualified education expenses. These expenses include tuition, fees, and required course materials. If you use any portion of a scholarship for non-qualified expenses like room and board or travel, that portion is considered taxable income and must be reported.

You should also gather receipts for any required educational expenses that are not reported on your Form 1098-T, such as textbooks, software, and equipment. These receipts are necessary to accurately calculate the value of any education tax credits you may be eligible to claim. They also serve as proof if the IRS requires verification.

Claiming Education Tax Credits and Deductions

Filing a tax return allows you to claim education tax credits. The American Opportunity Tax Credit (AOTC) is for students in their first four years of postsecondary education who are enrolled at least half-time. The credit is calculated as 100% of the first $2,000 of qualified education expenses and 25% of the next $2,000, for a maximum of $2,500. Up to $1,000 of the AOTC is refundable, meaning you can receive it as a refund even if you owe no tax.

A different tax benefit is the Lifetime Learning Credit (LLC), which has broader eligibility. The LLC is not limited to the first four years of college and can be claimed for courses taken to acquire job skills. The LLC is calculated as 20% of the first $10,000 in qualified education expenses, up to a maximum of $2,000 per tax return. This credit is nonrefundable, meaning it can only reduce your tax liability to zero.

Only one person can claim these education credits. If a parent or guardian can claim the student as a dependent, only the parent or guardian is eligible to claim the AOTC or LLC. This is true even if the student personally paid for their tuition. If the student is not a dependent, they can claim the credit on their own return.

The student loan interest deduction offers relief for those repaying student loans. This deduction allows you to reduce your taxable income by the amount of interest you paid on a qualified student loan during the year, up to $2,500. You should receive Form 1098-E from your loan servicer if you paid $600 or more in interest. This deduction can be claimed even if you do not itemize.

The Filing Process

After gathering your documents, you submit your tax return to the IRS. The most common method is electronic filing, or e-filing, which is faster and more secure than mailing a paper return. The IRS offers Free File, and for the 2024 tax year, you can use guided tax software at no cost if your Adjusted Gross Income (AGI) is $84,000 or less.

If you do not qualify for IRS Free File, you can use commercial tax software products that guide you through the process for a fee. Another option is Free File Fillable Forms, which are electronic versions of paper IRS forms but do not include step-by-step guidance. The traditional method of printing and mailing a paper tax return is also available.

If you are due a refund, e-filing combined with direct deposit is the fastest way to receive your money. The IRS issues most refunds in less than 21 days.