14 Smart Tactics for Paying Taxes as a College Kid
Filing taxes might not be at the top of your college to-do list, but understanding the basics can save you money and prevent future headaches. Whether you have a part-time job, receive financial aid, or work as a freelancer, knowing your tax obligations is essential.
You might even qualify for deductions or credits that can boost your refund. In this guide, we’ll break down tax essentials for students, helping you navigate filing season with confidence.
Determine your dependency status to know if your parents can claim you as a dependent
Knowing if your parents can claim you as a dependent affects tax credits and deductions. If they support you financially, they may get a tax break. But if you provide most of your own support, you might qualify for your own tax benefits.
Checking this helps avoid IRS issues and ensures you file correctly.
To learn more: Can I Claim My Girlfriend / Boyfriend as a Dependent? Overview, Rules, and Tax Guide
Check if you need to file by reviewing income thresholds for your filing status
The IRS has income limits that determine if you need to file taxes. If you made under a certain amount, you might not have to file, but doing so could still get you a refund.
Part-time jobs, scholarships, and other earnings all count. Knowing the limits helps you avoid unnecessary paperwork or missing out on money.
Understand taxable vs. non-taxable income
Not all money you receive in college is taxed. Some scholarships and grants are tax-free, while work-study wages and side jobs count as taxable income.
Understanding what the IRS considers taxable can help you avoid surprises when filing. It also helps you keep better records of your earnings.
To learn more: Three Types of Income Sources You Need to Know About
File a tax return even if not required to potentially claim a refund
Even if you don’t have to file taxes, you might still get money back. If your employer withheld taxes from your paycheck, filing a return could lead to a refund.
This extra cash could help cover books, rent, or other expenses. It’s a simple way to check if the IRS owes you money.
Take advantage of education tax credits
Tax credits can lower the amount you owe or increase your refund. The American Opportunity Credit helps cover tuition, books, and school supplies. The Lifetime Learning Credit applies to a wider range of education expenses.
Claiming these can help reduce the financial burden of college.
To learn more: How to Pay for College Without Loans and Student Debt
Report all income sources
All money you earn needs to be reported on your tax return. This includes wages from jobs, freelancing, or side gigs like food delivery and ridesharing.
Not reporting all income could lead to penalties or IRS audits. Keeping track of all earnings makes tax time easier and avoids mistakes.
To learn more: Do You Have to File Taxes if You Have No Income?
Use free tax filing services like IRS Free File or VITA if you qualify
Paying for tax software or an accountant isn’t always necessary. The IRS Free File program and VITA offer free tax help for eligible students.
These services can guide you through filing correctly and claiming the right credits. Using them saves money and helps you avoid errors.
To learn more: How to File Taxes Online in One Afternoon
Track deductible expenses for School
Certain expenses can reduce the amount of taxes you owe. If you pay student loan interest, you may qualify for a deduction. Books, supplies, and tuition-related fees can also be deductible in some cases.
Keeping receipts and records makes it easier to claim these tax breaks.
To learn more: 10 Ways on How to Drastically Cut Expenses Now
Consider state taxes if you attend college in a different state than your permanent residence
Living in one state but attending school in another can make taxes tricky. Some states require you to file taxes in both places.
Checking state tax laws early can help you prepare and avoid last-minute surprises. Knowing where to file ensures you pay the right amount and don’t overpay.
Set aside money for self-employment taxes
If you make money through gigs or freelance work, taxes aren’t automatically withheld. That means you may owe self-employment taxes.
Setting aside a portion of earnings throughout the year can prevent a big tax bill later. Planning ahead makes it easier to cover what you owe.
To learn more: Tips to File Self Employed Taxes
Check if you qualify for tax deductions
Some expenses can lower your taxable income. If you moved for a new job, you might be able to deduct moving costs. Contributions to an IRA can also provide tax savings.
Checking what deductions apply to you can help reduce what you owe or increase your refund.
Avoid missing tax deadlines to prevent penalties and interest
Filing late can lead to penalties and extra fees. If you owe money, waiting too long can make your tax bill even bigger.
Marking deadlines on your calendar helps you file on time and avoid stress. Filing early also ensures you get any refund sooner.
To learn more: How to File Taxes Without W2: The Simple Guide
Direct deposit your refund for faster processing and secure receipt of funds
Choosing direct deposit is the quickest way to get a tax refund. It’s safer than waiting for a check in the mail and reduces the risk of lost or stolen payments.
Plus, the IRS processes electronic refunds faster. If you need the money quickly, this is the best option.
Ask for help if needed
Taxes can be confusing, especially for first-time filers. Many colleges offer free resources like using campus resources or tax prep assistance. If you’re unsure, a tax professional can help avoid mistakes.
Getting help ensures you file correctly and don’t miss out on savings.
Why do you owe taxes this year?
If you owe taxes, it could be due to underpaid withholdings or untaxed side income. Some jobs don’t take out enough taxes from your paycheck, leaving a balance due.
Freelancers and gig workers often don’t realize they need to set money aside. Understanding why helps you plan better for next year.
To learn more: Why Do I Owe Taxes This Year? 10 Reasons To Spot
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