As the cost of a college tuition continues to increase, so does the number of working students. Starting college is usually a milestone for most entry-level students and their families. This is frequently seen as a transition into independence. With this independence follow many responsibilities. Little does the college student think about filing their own tax returns as they were usually claimed on their parents’ return with the only requirement being to provide their social security number. However, filing tax returns as a working college student is very important for the following reasons:
Obligation – As a working US citizen or resident, regardless of whether or not you are a student, if your earned income in a particular year is above the minimum requirements (which is $9,750 for a single person under the age of 65 in 2013), you must file a Federal tax return. It is the law. In many families, the parents claim the student on their tax returns, however if the student’s gross income is above $950, the student must file a separate tax return also. For international students different rules apply and different forms may need to be filed.
Benefit from Tax Credits – There are a two Tax Credits that are available to a college student, that can put some money their pockets after filing their taxes. These are the American Opportunity tax credit, and the Lifetime Learning tax credit. The American Opportunity tax credit provides 100% credit for the first $2,000 of qualifying expenses (tuition books, fees) and 25% credit for the next $2,000 for a maximum credit of $2,500 . This is available to students enrolled at least half time during undergraduate study for the first four years of college. The Lifetime Learning tax credit is available to graduate and undergraduate students who can claim 20% of $10,000 of expenses in one year for a maximum credit of $2,000. As a college student, this refund will definitely be of some assistance.
Filing taxes is usually free for students. If a student is dependent and works minimally while attending school, none of the above conditions may apply. However, even then, a student under the age of 24 can be refunded all the taxes that had been taken from their pay checks. Furthermore, it is helpful to get experience in filing taxes sooner rather than later because it is inevitable.