The last thing a college student wants to think about during exam season is taxes. Every hour is already filled with an essay to write, an exam to study for, or a club meeting to attend. Unfortunately, taxes -- unlike an old fling -- aren't something you can avoid and get away with. So to make filing these dreaded forms a bit easier, and hopefully get students some cash back, NerdScholar has answered eight common questions about taxes for college students.
1. Do I need to file taxes?
If you earned more than $6,100 in 2013, even if you can be claimed as a dependent, you must file a tax return. The IRS recommends filing a return if you have had any federal income tax withheld so that you get some of that money back -- even if you are not required to file. Refer to IRS Publication 501 for full filing requirements.
2. What documents do I need to file my taxes?
You'll need a W-2 from your employer, which you should receive in the mail. You'll also need Form 1098-T from your school and Form 1098-E if you paid student loan interest, both of which you should also receive in the mail. Make sure to save your receipts for educational expenses, such as tuition and books, and records for scholarships or fellowships. You'll need those to accurately report the amounts you paid.
(Here's your full tax prep checklist.)
3. Can my parents claim me as a dependent?
Your parents can claim you as a dependent if you are 23 years old or younger, you have lived with them for more than half the year, and they have provided more than half of your financial support. If your parents do claim you as a dependent, it's important that you don't claim yourself; check the box stating that somebody else can claim you as a dependent if this is the case.
4. Do I have to pay taxes on my scholarships?
If you use your scholarship or fellowship grant money for tuition, fees, books, and supplies and equipment required for coursework, you do not have to pay taxes on it. However, if any portion of those funds is used for room and board, travel, or optional equipment, that portion is taxable and must be included in your gross income. If that's the case, you may have to estimate your tax payments. Use Worksheet 1-1, Taxable Scholarship and Fellowship Income to calculate those amounts.
5. I go to school out of state -- do I have to file in both states?
If you have a job while attending school out of state, you may have to file in both states, depending on the laws of the state. You do have to file in your home state, but you'll need to check the tax laws in the state where you're attending school to see if you're required to file in that state.
6. How much will it cost to file my taxes?
If you made less than $58,000, you can file your taxes for free using IRS Free File. Tax-preparation companies such as H&R Block or TurboTax also offer free-filing options. If you want additional assistance, you can pay to have your taxes prepared by a professional.
7. What types of tax breaks are available for college students and their families?
The government offers education credits, which reduce the amount of tax you pay, as well as deductions, which reduce the amount of your income that is taxable. Here are some of the most common tax breaks:
- American Opportunity Credit: You may be able to claim as much as $2,500 per student for qualified education expenses, including tuition and related expenses. This credit can be claimed for the same student for up to four years.
- Lifetime Learning Credit: You may be able to claim up to $2,000 for qualified education expenses paid for all eligible students. There is no limit to the number of years this credit can be claimed.
Note that only one of these credits can be claimed for each student each year.
- Student Loan Interest Deduction: If your modified adjusted gross income is less than $75,000 or $155,000 when filing jointly, you can deduct up to $2,500 for interest paid on student loans.
- Tuition and Fees Deduction: You can deduct up to $4,000 from your taxable income for tuition and fees paid for higher education.
8. What do I do if I make a mistake after submitting my tax forms?
If the error is mathematical, it will likely be caught in the processing of your return, in which case you don't have to do anything. If you did not include a required schedule with your return, the IRS will contact you, and you will just need to send the missing information. If you did not claim all of your income or missed a credit, though, you'll need to file an amended or corrected return using Form 1040X and include copies of any schedules that were changed. You must file an amended return within three years of the date you originally filed or within two years of the date you paid the tax, whichever occurred later.
You can visit irs.gov for instructions on filing, and visit their FAQs if you have more questions. If you're using tax preparation software such as H&R Block online, you can also ask their tax professionals any questions that may arise.
The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.