Students and Income Taxes
Income Tax Return Filing Requirements For Students
Student Income Taxes - Class 101: Income and age determine whether a person has to or should e-file a tax return more than job title or education status as a student. We spare you from reading over all the detail tax factors that stipulate if you should or should not prepare and file a return. Simply use the free and easy FILEucator tool below, answer a few simple questions, and you got the answer. Again, keep in mind that even if you don't have to file a tax return, you might want to file a return as a young person or student.
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You might wonder if you should still file your own tax return if you are claimed as a dependent child or student by your parents or somebody else. The short answer is yes, you can. When you do prepare and file your own tax return, simply indicate on your tax return that somebody claims you as a dependent on their tax return (you will find a checkbox with that question on IRS Form 1040 or 1040-NR).
There are conditions that must be met in order for your parents to claim your interest and dividend income (including capital gains distributions) on their tax return, which would mean you would file with your parents. All of the following conditions must be met for them to do so:
- If you were under 19 or under 24 as a full time student by the end of the year.
- The only income you receive is from interest and dividend payments, including payments from the Alaska Permanent Fund.
- Your gross income was under $12,000 (for Tax Year 2018).
- You are not filing a return or a joint return.
- No estimated tax payment was made for this year and no tax overpayment was made from the previous year or amended tax return in your name or Social Security Number.
- No federal income tax was taken out of your income under the backup withholding rules.
Visit this page for more information on whether or not to file a tax return as a dependent.
If you are a foreign student with nonresident status read this section about nonresident tax returns and Form 1040-NR.
General and Student Specific Taxable and Non Taxable Income
We have dedicated a section on taxable income and a section on tax free or non taxable income. If you have generated income that is not listed on either of these pages, please contact an efile.com Taxpert to get answers to your specific income and tax circumstances.
There are a few taxable income types specific for students. Keep in mind, this is not an all inclusive list. Check the links above for that.
- Pay for services performed, like wages, salaries, tips, ROTC active duty pay (for example, pay that you received during advanced camp during the summer--but not ROTC subsistence allowances)
- Self employment income that includes but not limited to summer jobs, tips, lawn mowing, babysitting, newspaper delivery, etc.
- Scholarship money you receive for incidental expenses, including room, board and travel is taxable in most cases.
- Cash payments you obtain for teaching, research and other services as a condition of receiving financial aid.
- If your scholarship exceeds the total tuition, fees, supplies, equipment etc. you might have to pay on that portion.
Non taxable student income
- Financial aid (Scholarships, fellowship grants and teaching assistantships) that pay for higher education might be "free" to you, but you might have to pay taxes on this type of income. Generally, a scholarship for tuition expenses and fees is tax-free, except the payments for room and board are taxable income to you. According to the IRS, students must meet the following two conditions for scholarships or fellowships to be tax free: 1. Required to be a candidate at an educational institution with a regular faculty and curriculum. The organization (school, college, university) must have a regularly enrolled body of students in attendance. 2. The financial aid funds you receive is for tuition and fees required for enrollment or fees, books, supplies and equipment needed for courses.
- Financial aid for for services that are required by the the Armed Forces Health Professions Scholarship and Financial Assistance Program or National Health Service Corps Scholarship Program are tax free.
- Some Payment by an employer to you in form of a education or tuition-assistance programs. You can exclude up to $5,250 of this education assistance from your income. The following education expenses qualify: Tuition, Books, Fees and similar payments, Supplies, Equipment.
Tax or Income Reporting Forms
- Form W-2: Wages, salaries as part of a teaching assistantship or fellowship
- Form 1098-T: Scholarships, fellowships and grants received plus qualified tuition expenses. You may notice that the amount shown on Form 1098-T is different than the amount you actually paid. That’s because some of your related costs (such as textbooks) may not appear on the form for the given tax year. However, you still may be able to claim the costs as part of the credit.
- Hold on to receipts for textbooks, supplies and equipment since they will not be reported on Form 1098-T
In summary, when considering a school or university you should ask the following questions when it comes to financial aid:
- Is this fellowship or scholarship payment for service (research etc.) and how much the actual scholarship? Which tax documents you should expect?
- Calculate and compare the actual cost of different schools and programs. For example, total cost of attendance minus total aid = your net cost. Plus factor in potential tax payments if any.
How To File a Tax Return As A Student
1. Find out if you as a college student qualify as a Dependent on your parent's or somebody else's tax return.
Start the DEPENDucator
- If you do qualify, you can be listed as a Dependent on their tax return and your income and deductions would be reported on that tax return.
- Even if you qualify, you can still prepare and e-file your own tax return and be listed on somebody else's tax return as dependent.
2. If you plan to prepare and file your own tax return, start on efile.com and the software will guide you through via simple tax questions. You will know your tax refund or taxes owed before you can complete and efile your federal and state tax return on efile.com. You don't have to worry about which form or schedule to pick, efile.com does it all for you.
International, Foreign Students, Nonresident Alien Status
3. International , foreign students with non resident alien status. The IRS does have special rules for foreign and international students, scholars, teachers, and exchange visitors. The rules largely depend on the immigration status of the person (resident alien, nonresident alien, dual status alien) and apply to taxable income and tax withholdings. The assumption here is that your status in the US is that of a resident alien by holding a certain visa status. Beyond that, the rules for filing a tax return is based on income an international student generated in the US as a student. In addition, based on the country of your origin as an international student you need to check if there is a double taxation agreement between your country and the US.
If you are in the United States on a F-1 student visa (and you don't have a green card or don't satisfy the substantial residence requirement), you usually file your federal tax return as a nonresident alien. Unless you elect to be treated as a resident alien for federal tax purposes, you cannot claim an education credit for any part of the Tax Year. If you are a U.S. nonresident alien, you should file Form 1040NR or 1040NR-EZ.
Currently, you can not efile 1040NR or 1040NR-EZ on efile.com. We assist you completing the form. Please contact one of our Taxperts here.
For a comprehensive overview on international, foreign students and taxes please read this IRS Publication 519-U.S. Tax Guide for Aliens.