Tax Season Tips
Answers to Common Student Tax Questions

Do students need to file a tax return?

  • Whether or not a student needs to file a tax return depends on their income. If they earned more than $5,000 in income or have interest income, a tax return is required.
  • However, just because a student isn't required to complete a tax return doesn't mean they shouldn't. If their income was less than $5,000 but money was withheld from their paychecks, they should file. It's very likely they'll get back most or all of what was withheld.

What counts as income?

The following forms of income count for students filling out a tax return:

  • Any interest from financial institutions
  • Income reported by employers on W-2 Forms
  • Business income earned through freelance or entrepreneurial work
  • Some education grants, especially those used for other purposes, such as room and board
  • Income from work study programs

What forms should students use when filing their taxes?

  • W-2: A W-2 is the United States federal tax form issued by employers that states how much an employee was paid and the amount of taxes withheld from their paychecks in the previous year. The amount of taxes withheld is based on the withholding status determined by the W-4 form that's filled out when an employee begins a new job. An employee's withholding status takes into account marital status, dependents, and whether or not the employee wishes to have more than the standard amount withheld from each pay check.
  • 1098-E: The 1098-E is a form filed with the IRS that details the amount of interest paid on qualified student loans during the previous year. Students may be able to deduct all or part of the interest paid on qualified student loans, which could reduce the amount they pay in income tax.
  • 1040: The 1040 form is the standard IRS form individuals use to file their annual income tax returns. Taxpayers use this form to disclose their financial income status for the previous year in order to determine whether additional taxes are owed, or whether the taxpayer is due for a tax refund. IF their parents are claiming them as a dependent, students may be entitled to a larger refund using the standard 1040 tax forms.
  • 1040-EZ: The 1040-EZ form is an alternative to the 1040 income tax form and offers a faster, easier way to file taxes. Its most often used by taxpayers with simple tax situations.

How should students file their tax return?

Students have a variety of options available to them when filing their tax return:

  • In person: In addition to local accounting firms, there are numerous tax preparation companies that advertise during tax season. For a small fee, students have the opportunity to work with a tax professional that will complete their income tax returns and walk through the process with them. This may be beneficial for first-time filers, or students with complicated financial situations.
  • Online: Many tax preparation companies also offer their services online. Some of these companies even allow for simple forms, such as the 1040-EZ, to be filed without charge. This option is great for students who want to file their own taxes quickly and cheaply.
  • VITA: For students who want to tackle their income tax returns on their own, there are still some safety nets available to them. Many schools work with Volunteer Income Tax Assistance (VITA), a national organization that offers free tax assistance for simple tax questions and has many branches available on college campuses. If your students have questions about their tax returns, find out if VITA is available near you.

References:

Tax season tips for your students (2014). Retrieved February 12, 2014, from MyGreatLakes.org.