Jim Probasco, Benzinga Staff Writer
The first question college students typically ask is, “Do I even need to file income taxes?”
The key word in this question is “income.”
As in, did you have any?
For starters, if you are a single dependent and your total earned income for the year was less than $6,100, you don’t have to file. That doesn’t mean you shouldn’t. Just that you don’t have to.
The reason you probably should file, even if your income falls under $6,100 is because you may get back all of the money that was withheld. IRS Publication 501 covers this question in detail.
If you do file, it’s important to avoid mistakes. Mistakes slow down refunds and draw attention to you with the IRS. This is something you do not want to do.
In addition to common mistakes many tax filers make, including failure to sign the return, math errors, and misspelled names, some mistakes apply mostly to college students – often because it is their first time filing a tax return.
Claiming the Wrong Dependent Status
Do not make the mistake of claiming yourself as a dependent if your parents do that. The test for this is whether your parents pay more than half of your support. If they do, they can claim you. They don’t have to but before you fill out your status, make sure you and your parents know who is going to take that deduction.
In addition, make sure you know the income rules regarding single and married dependents. Again, IRS Publication 501 provides clear information on status.
Missing Out on Education Deductions
Whoever pays your tuition (including you) can claim certain education-related deductions including those for tuition and fees, the Hope or Lifetime Learning tax credit, and several Higher Education Expenses Deductions.
Decide which ones you will take. You can’t take them all. Also, do not claim a deduction for funds taken from a tax-free education savings account. The IRS maintains a helpful Tax Benefits for Education Information Center that can provide guidance.
Failure to Account for Duel State Income
If you live in one state, attend school in another, and work in both, you will have to account for the income (and taxes paid) from both states.
As an example, suppose you live in Indiana but attend college in Michigan. Since you are a resident of Indiana that’s where you will have to claim all of your income, including the income from Michigan. However, you will get a credit for taxes paid on income in Michigan.
A Little More IRS Help
In addition to previously cited websites, the Internal Revenue Service has one designed specifically to provide important information for students. It’s called Tax Information for Students.
Before beginning your tax return, go there to learn about tax credits, deductions, savings plans, as well as rules regarding scholarships and grants.