Filing your taxes as a student is a big adult move! We see you! We’re here to share some practical tips to make filing your taxes as a college student a little easier.
Do You Need To File?
First and foremost, let’s figure out if you need to file taxes. If you have earned income less than $12,200 a year, then you do not need to file. The reason being that this amount is the standard deduction in 2020, which would zero out your tax bill. You may still want to file if you had income during the tax year that withheld taxes on your paycheck. You never know, you could be eligible for a tax return. Find out by using IOOGO Tax DIY. It’s free for income earners who make less than $25,750 a year.
Are you a dependent?
If you decide to file taxes, you’ll need to know the answer to this question, are you claimed as a dependent on someone else’s taxes? If you’re in college fresh out of high school, it’s likely that your parents still claim you as a dependent, which would make you ineligible for claiming tax credits. Check with your parents on your dependent status before you file.
Explore Tax Credits
If you are not claimed as a dependent, there are a few tax credits you should be aware of! A Tax credit is a dollar-for-dollar deduction on the amount of taxes you owe. There are two common credits available to students, the American Opportunity Credit and the Lifetime Learning Credit.
- The American Opportunity Credit (AOTC): The most valuable tax credit that allows you to claim up to $2,500, per year. You must be enrolled half of the school year to be eligible.
You’ll receive 100% of the first 2,000 in qualifying expenses and 25% of the next $2,000. You can even claim a tax refund of up to $1,000 if your tax bill is zeroed out.
The AOTC can only be claimed for the first four years of college.
- Lifetime Learning Credit: A non-refundable tax credit up to $2,000 that applies to undergraduate, graduate, and professional degree courses that help improve your job skills.
This means, you can claim up to 20% of the first $10,000 you spent during the year on qualifying education expenses.
There is no limit on how many years the lifetime learning credit can be claimed.
In order to receive both credits, you must submit qualifying expenses. These expenses can include tuition, fees, books and other mandatory school expenses.
Know What Is Taxable Income
Aside from income earned as a job, grants can also be considered taxable income. Opt for scholarships if you’re looking for a tax-free way to get more money for college.
We hope this blog post clarified a few key things to know as a college student. When it’s time to file, don’t forget about the two deductions we highlighted, those are key! If you’re ready to file, check out the IOOGO Tax DIY and file your taxes with us in under 15 minutes.