Maggie Wiggins, a college junior from Indiana majoring in biology, was told by her parents that — now that she’s in college — she’s on her own with her taxes. “I’m honestly a little intimidated by it,” she says.
Are you newly on your own with tax filing, too? Here are a few tips to help college filers like Maggie do it with less stress.
Decide How You’ll Get Them Done
Many college students opt to have experts do the hard work for them. Big-box tax experts like H&R Block generally charge $69 and up, depending on your tax situation. A CPA (certified public accountant) with a boutique store or independent business will charge more, but give you more personal advice.
If your situation is pretty straightforward, you can use programs like TurboTax, which will walk you through the process step by step and provide online resources if you have questions. The IRS also has free filing programs available for individuals with incomes lower than $69,000 — which likely includes you, if you’re still a full-time student.
CPA Anna Martin urges college students to check with their schools to see if they provide free tax help.
“Lots of colleges know how hard it can be to file taxes as a college student, and there’s a big push to have free resources — or even tax prep experts — on-hand to help out.”
Are You a Dependent or an Independent?
If you’re a full-time student under the age of 24 and your parents are supporting you financially, you’re most likely still a dependent.
However, if you pay your own tuition, use your paychecks for most of your expenses (including insurance and rent), or do not live at home (or in a paid dorm room) for more than 50 percent of the year, then you may be an independent.
Gather Your Forms
Whether you’re an independent or a dependent, as a college student, you’ll need to file taxes if you made money from self-employment, a part-time job, or a work-study program.
By January 31, you should have received some specific forms indicating how much money you've earned. These may include:
- A W-2 form from an employer that gave you a paycheck.
- A 1099-MISC form from a company for which you worked as a contractor or otherwise self-employed person.
- A 1098-T form from your college that indicates how much tuition you paid and what (if any) scholarships you received.
- A 1098-E form from your student loan holder that shows how much you paid in interest. (You may not receive one if you paid less than $600.)
Your scholarship funds used exclusively to pay for tuition and necessary school supplies (such as textbooks) will end up tax-exempt. However, if you spent any scholarship funds on what the IRS sees as “non-required expenses,” such as room, board, or equipment (like a new laptop), the scholarship funds allocated for those purposes may be subject to taxation.
Deduct Your College Expenses
If you’re filing as an independent, you can deduct certain costs based on how much you shelled out for college expenses. These may include costs of textbooks, other required supplies, and any enrollment fees not included in your tuition.
That could mean a lot of money back when your tax return comes.
Your 1098-E forms can also help you get back money that you paid in student loan interest as an independent filer, as this is also deductible from your income taxes.
Martin cautions that non-required items like a new laptop and monthly rent are not allowed as expense. And, of course, keep all the receipts.
Be sure to also maximize your education credits. “A student can qualify for a lifetime learning credit or American Opportunity Credit,” says Vincenzo Villamena, managing partner and CPA at Online Taxman.
“Make sure to do the proper analysis to maximize your benefit on paying the college tuition and exercising your right to receive these credits. “
Process Your State Taxes (If Applicable)
In most states, you will also need to submit state-specific taxes. For online programs, this is easy: Just move over the information from your federal taxes to your state taxes. If you worked in one state and lived in another, you’ll need to file taxes for both states.
Sign, Date, and Submit
One of the biggest mistakes that new filers make is not signing off on your taxes. Don’t forget to sign and date on the dotted line. If you’re filing online, make sure that you follow the instructions all the way to the end when you’ll get a confirmation message that both your state and your federal returns have been successfully submitted.
If you have a tax expert do the work for you, ask if they will mail it for you or if you need to make a trip to the post office. This is a mistake that CPA Stephanie Andrews sees often.
“Because of liability issues, I have my clients mail the paperwork themselves,” Andrews states. “And even though I give them the envelope and stamp, there are always a few young clients who forget to do it.”
Now that you’ve got your major in “prep work,” go ahead and file early — don’t leave it until the last minute. Especially as a college student filing taxes, you want to leave room to rectify any mistakes you might make.
Additional background information for this article was provided by Vincenzo Villamena, CPA.