Information on Student Taxes
It is a myth that students do not need to file or pay taxes. If you worked at any time during the tax year, you should file a tax return, and can most likely expect a refund if you take advantage of the various tax breaks available for students and their parents.
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Dependent Status
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Even if you are a student living out of state, if your parents are paying at least half of your expenses, you can be claimed as a dependent on their taxes. This affects your tax return as you cannot make various tax deductions and claims yourself, which means no tax return for you come April. If you file as independent but your parents claim you as a dependent, an audit can be triggered on your tax returns and those of your parents. To prevent problems, talk with your parents before filing your taxes to learn whether they are claiming you as a dependent so that you can decide how to proceed.
Place of Residence
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This is more important for your state tax return as you must pay taxes for your state of residence. Each state has different eligibility requirements to determine residency, so it is important you check with the state tax boards both where you go to school and where you lived with your parents to determine where you are considered a resident. Be forewarned. Some states allow dual residency, so you could end up paying taxes in both states.
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Educational Credits
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The American Opportunity Credit allows up to $2,500 of deductions for eligible tuition and educational costs for Americans in a qualified institute of higher learning. To claim the American Opportunity Credit, you must make less than $80,000 for singles or $160,000 per year for married couples. The Lifetime Learning Credit is available to those in enrolled in post-graduate education for up to $4,000, but not in conjunction with a claimed American Opportunity Credit.
Student Loan Interest
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When you receive your tax documents in the mail, you should also receive a 1099 from your student loan lender listing the amount of student loan interest paid for that tax year. This student loan interest paid is tax deductible up to $2,500, a deduction that can turn your tax bill into a tax refund.
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References
Resources
- Photo Credit A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com
