Do You Get a W-2 for Work Study Earnings?

Work-study programs offer students an opportunity to earn money for educational expenses, typically through part-time jobs on campus or at approved off-campus organizations. Students often wonder how their work-study earnings are reported for tax purposes, specifically if they receive a Form W-2.

Taxability of Work-Study Earnings

Work-study earnings are generally considered taxable income, similar to wages from any other job. This is because these funds are compensation for services performed, rather than a grant or scholarship intended solely for educational expenses like tuition or fees. Work-study income is subject to federal, and potentially state and local, income taxes, depending on the jurisdiction.

Work-study earnings are also typically subject to Social Security and Medicare taxes, known as FICA taxes. However, an exception often applies to students employed by their educational institution: FICA taxes may not apply if the student is enrolled at least half-time and their employment is primarily for the purpose of pursuing a course of study. This FICA exemption is not universal and depends on specific criteria, such as enrollment status and the nature of the employment relationship. Students should consult their school’s financial aid or payroll office to understand how FICA taxes apply to their situation.

Reporting Work-Study Income

Work-study income is typically reported on a Form W-2, Wage and Tax Statement. This annual statement is provided by the employer, usually the educational institution or an approved off-campus employer. The W-2 details gross wages earned and amounts withheld for federal income tax, state income tax, and FICA taxes (Social Security and Medicare).

Employers must issue Form W-2 to employees by January 31st of the year following the tax year in which the income was earned. For example, a W-2 for earnings in 2024 should be sent by January 31, 2025. If a W-2 is not received by early February, students should contact their school’s payroll or financial aid office to inquire about its status.

Before receiving a W-2, students typically complete a Form W-4, Employee’s Withholding Certificate, when they begin their work-study position. This form provides information to the employer to calculate the correct amount of federal income tax to withhold from each paycheck. Completing Form W-4 helps ensure appropriate tax withholding throughout the year, potentially preventing a large tax bill or a significant refund.

Filing Your Tax Return

Once a student receives their Form W-2, the information on it is essential for completing their annual income tax return. The W-2 provides the necessary figures for wages, tips, and other compensation, as well as federal, state, and local taxes already withheld. This data is entered onto the appropriate tax forms, most commonly Form 1040, U.S. Individual Income Tax Return.

Students have several options for filing their tax return, including commercial tax software, the IRS Free File program, or a tax professional. The IRS Free File program offers free tax preparation and e-filing for eligible taxpayers, typically those with an adjusted gross income (AGI) below $84,000 for tax year 2024. Maintaining accurate records, including the W-2 and other relevant financial documents, supports the information reported on the tax return.

Even if a student’s work-study income is below the IRS filing threshold, filing a tax return can be beneficial. If federal income tax was withheld, filing is necessary to claim any potential refund. Filing also allows students to claim education-related tax credits, such as the American Opportunity Tax Credit, which could reduce their tax liability or result in a refundable credit. It also helps establish a tax filing history and can be useful for future financial aid applications like the Free Application for Federal Student Aid (FAFSA).