As a college student, you may not realize it yet. But it’s important to know how and when to file your taxes. Of course, you may be wondering if you even have to file taxes and what happens if you don’t file taxes.
In this blog post, we will answer all of your questions and give you tips on how to get the best tax refund possible!
So, whether you are a first-time tax filer or just need a refresher, keep reading for information that will help you save money this tax season.
Do College Students Have to File Taxes?
Yes, but only if you’ve made over a certain amount. How much? You don’t need to file taxes if you’ve earned less than $12,950 (or $25,900 for married couples filing jointly) during the 2021 tax year.
You also don’t need to file taxes if all of your income was from tax-exempt sources like scholarships or grants.
What Happens if You Don’t File Taxes?
If you do need to file taxes but forget or decide not to, you could face some serious consequences.
To start, the IRS will send a letter to your last known address asking for taxes owed. If you don’t respond to the letter and take care of what is due, they will eventually begin contacting any other sources that have your information. For example, they might contact your family members or employers.
If they still can’t reach you, the IRS can take legal action and send your information to a private collection agency.
If you continue to avoid taxes, they can begin to do things like:
- Legally seize some of your property (e.g. your car)
- Take money directly from your paychecks or bank accounts
- Block you from renewing or applying for a passport
- Withhold your tax refund
What Documents Do You Need to File Taxes?
So, if you do need to file taxes, what do you need? Here’s what H&R Block says are the essential tax documents to have on hand when filing taxes.
- Your personal information. This includes – but is not limited to – your social security number, tax ID number, and your bank account information.
- Information about any dependents. If you’re a parent or caretaker, you’ll need to have information like your child’s social security number, childcare records, and more.
- Sources of income. From your current and past employers during the last tax year, you’ll need to get a W2. If you were unemployed, you’ll need to get a form called a 1099-G. If you were self-employed with, for example, a side hustle, then you’ll need things like a 1099 and records of your income and expenses.
- Forms for any eligible tax deductions. You may be eligible for multiple tax deductions or tax credits. We won’t list all of those here. But you can see examples on the full tax prep list from H&R Block that we linked above. As a student, though, you’re likely to need a 1098-T form from your college, receipts for qualified education expenses, and records of the scholarships you’ve received.
This information here isn’t exhaustive. You may need more tax forms than that. So, be sure to do more research on your specific situation or get help from a tax professional.
How to get your W2
Your employer should send you a W2 or give you one upon request. This is the quickest way to get your W2. But if you have trouble getting it from your employer(s), you can also request a copy from the IRS.
When Is This Year’s Tax Deadline?
This year, the tax deadline is Monday, April 18, 2022. But that doesn’t mean you should wait until then. If you need to file taxes, start working on that ASAP. And use the tips below to save some money when you do!
6 Tax Tips for College Students
Here are 6 tax tips that are specifically relevant to you as a college student. If you have to file taxes and follow these tips, you’ll be on your way to getting the best return possible!
#1 Check your dependency status
Will your parents claim you as a dependent on their tax return? If not, meaning you will claim yourself as a dependent on your own tax return, then you can take advantage of certain tax credits and deductions.
If your parents do claim you on their tax return, then you’re not eligible for these tax benefits. So, if you aren’t receiving their help to pay for college, it may make sense to ask your parents not to claim you on their tax return.
#2 Take advantage of student tax credits
As a college student, you are eligible for several education tax credits that can help lower your taxes. Two popular education credits include the American Opportunity Credit and Lifetime Learning Credit.
The American Opportunity tax credit lets you claim up to $2,500 per tax return for qualified education expenses related to your undergraduate education. For example, your tuition and fees for college count as qualified expenses.
The Lifetime Learning Credit also lets you claim 20% of the first $10,000 of college tuition and fees paid during the year, which works out to be a maximum credit of $2,000.
It is important to note that these two credits cannot be used at the same time.
#3 Pay interest on student loans
If you have student loans, you can deduct the amount of interest paid on them from your taxable income. This is referred to as the student loan interest deduction and is a great tax benefit if you’re already working to pay off your student loans.
By applying for this deduction, you can deduct up to $2,500 per year. So, make sure to include it on your tax return! But this is one of those benefits only applies if your parents don’t claim you on their tax return.
#4 Apply for scholarships
Scholarships are not subject to taxes and won’t be included in your taxable income! This can save you a lot of money if you’re receiving multiple scholarships throughout the year.
We realize that, if you don’t already have scholarships, this tip doesn’t really help you save money this tax season. But, as a college student, it’s something to keep in mind for the coming year. It’s also a good reason to find and apply for scholarships as soon as you have time.
#5 File your taxes even if, technically, you don’t have to
Even if you don’t need to file a tax return this year (because your income during 2021 was below the $12,950 per year threshold), it still may be in your best interest to do it anyway. Why? Because there’s a chance you’re eligible for tax credits and a refund.
For example, if you had a part-time job or a work-study job, you probably had taxes taken out from your paychecks. If you file taxes, you could get all of that money back as a tax refund.
#6 Learn how to file your taxes for free
Yes, there is such a thing as free tax filing. In fact, the IRS offers a program called Free File that lets you file a tax return for free using commercial software.
You can also get free tax help and use free editions of online tax filing software from companies like Credit Karma’s Cash App Taxes (you can also use Credit Karma to check your credit score for free too). Using this online software, you can file a basic tax return for free.
If you’re looking to save some money, these free online tax software are great options. Just be sure to read the fine print beforehand, as there are some restrictions on who can use them.
Key Takeaways
As a college student, filing taxes is probably the last thing you want to think about. But by following the tips we shared in this blog post, you can make the process as painless as possible and get the most money back in your tax refund!
And if you want more money-saving and money-making tips, be sure to check out the rest of our blog. It’s where we share in-depth tips and advice on topics like how to start investing and how to build credit fast.