Should a College Student File Taxes? What You Need to Know

Tax filing can appear complicated for college students, whether they are focused on their studies or balancing work with academics. Understanding basic tax obligations and opportunities is important for navigating financial responsibilities. Filing a tax return may be necessary, or it could offer financial benefits, even if not legally required.

Determining Filing Requirements

College students, like other individuals, must file a federal income tax return if their gross income exceeds certain thresholds. For the 2024 tax year, a single dependent, which many college students are, generally needs to file if their unearned income was over $1,300, or their earned income was more than $14,600. If a student’s gross income, combining both earned and unearned income, exceeds the larger of $1,300 or their earned income plus $450, they must also file.

Being claimed as a dependent on another person’s tax return affects these filing thresholds. Even if total income is below these limits, specific situations can still trigger a filing requirement. For example, if a student has net earnings from self-employment of $400 or more, they must file to report this income and pay self-employment taxes. Additionally, certain special taxes, like uncollected Social Security and Medicare tax or a penalty for an early withdrawal from savings, can necessitate filing regardless of overall income.

Reasons to File Even If Not Required

Even if a college student does not meet mandatory filing thresholds, filing a tax return can be financially advantageous. Many students have federal income tax withheld from their wages by an employer. The only way to receive a refund of any overpaid taxes is by submitting a tax return.

Students may also qualify for refundable tax credits, which can result in a refund even if no tax was owed. The American Opportunity Tax Credit (AOTC) is partially refundable, allowing eligible students to receive up to $1,000 back. Other refundable credits may apply depending on a student’s income and family situation. Filing a return is necessary to claim these potential refunds and benefits.

Gathering Necessary Information and Documents

Before preparing a tax return, collect all relevant information and documents. Essential personal details include your Social Security number and date of birth. For income reporting, students will need various forms depending on their earnings.

If employed, Form W-2 will be provided by each employer, detailing wages paid and taxes withheld. For freelance or contract work, Form 1099-NEC or Form 1099-MISC report income not subject to traditional employment withholding. Students with interest income from savings or investments will receive Form 1099-INT, while those with dividend income will receive Form 1099-DIV.

Education-related documents are also important for potential tax benefits. Form 1098-T, the Tuition Statement, is issued by eligible educational institutions and reports qualified tuition and related expenses. Students should also keep records of other qualified education expenses not included on the form. If student loans were paid, Form 1098-E reports the amount of interest paid, which may be deductible.

Understanding College-Related Tax Situations

College students encounter specific tax situations that can impact their tax liability or eligibility for refunds. Qualified education expenses include tuition, fees, and costs for books, supplies, and equipment required for courses. These expenses are key to claiming education tax benefits.

Scholarships and grants can be tax-free if used for qualified education expenses. However, any portion used for non-qualified expenses, such as room and board, becomes taxable income. The student loan interest deduction allows eligible taxpayers to deduct up to $2,500 of interest paid on qualified student loans. Eligibility for this deduction is subject to income limitations based on Modified Adjusted Gross Income.

Two education tax credits are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is available for the first four years of higher education, offering a maximum credit of $2,500 per eligible student, with up to $1,000 being refundable. The LLC is a broader credit, applicable for undergraduate, graduate, or job-skill courses, with a maximum credit of $2,000 per tax return. Both credits have income limitations, and taxpayers cannot claim both for the same student in the same tax year.

Filing Your Tax Return

Once information and documents are gathered, several methods are available for submitting a tax return. Many taxpayers opt for tax software, which guides them through the filing process. Alternatively, a professional tax preparer can complete and file the return. Paper filing by mailing forms to the IRS remains an option.

The deadline for filing federal income tax returns for the 2024 tax year is April 15, 2025. If additional time is needed, an extension can be requested, pushing the deadline to October 15. After a return is filed, the IRS processes it. If a refund is due, it is issued via direct deposit or a paper check.