do students need to file taxesAlthough college students might see filing tax returns as something squarely in the realm of “adulting,” the truth is that many students may have to file taxes well before entering the adult world. Other students might not technically have to file, but will benefit nonetheless because they can receive a refund for the credits for which they qualify. While filing taxes can be intimidating for students — and first-timers in general — it doesn’t have to be. Below, we detail everything you’ll need to know about filing taxes as a student.

How can I tell if I need to file?

It can be difficult to know whether you should submit a return as a student because of the number of variables that affect student returns. Between student jobs, scholarship money and whether or not you can be claimed as a dependent, you have a lot to consider before filing. The general rule of thumb is that if you worked a job during the year which earned you more than the minimum gross income for your age and filing status (as defined by the IRS), you’ll likely need to file. This amount varies based on your dependency status, as well as whether you are single or married (if you aren’t a dependent). The IRS has full guidelines for filing as a dependent on its website, including a worksheet that students and their parents can use to determine whether a dependent needs to file taxes. If you’ve participated in work-study, had a job over the summer, freelanced during the school year or received scholarship money, you could meet this requirement (even if you’re a dependent). Students who aren’t claimed as dependents might also benefit from filing, even if they haven’t worked, as they’ll likely get a refund due to the credits and deductions that students are eligible for.

If you’re not sure whether or not you need to file, you can talk to your parent or guardian, or seek out resources at the institution you attend. There might be on-campus clubs, workshops and classes dedicated to providing students help with filing taxes. Programs like Volunteer Income Tax Assistance (VITA), an official IRS program which helps taxpayers, might have a presence on your campus. Additionally, you can try using one of the top-rated e-filing services, which are designed to help you navigate the tax return preparation process with ease.

What credits and deductions are students eligible for?

If you are a dependent, it’s important to note that you likely won’t be able to claim any of these, as the IRS has strict rules to prevent the double claiming of benefits. If you’re aware that there’s someone who can claim you as a dependent, you should sit down together and discuss who should claim these benefits. Similarly, if you are filing on your own, the same rules apply, which means that you can only choose one of these tax benefits to apply to your educational expenses. There are four tax benefits that students who aren’t dependents can claim. Each one requires you to be enrolled in an accredited academic institution for a specified duration and only goes toward reducing money spent on approved education expenses, like tuition and books.

1. American Opportunity Tax Credit. This credit allows a student to earn an annual credit of $2,500 toward educational expenses during the year, 40% of which can be refunded in cash if the credit brings your total amount of taxes due to $0. To qualify, individuals must be pursuing a degree or other recognized education credential and enrolled in school at least half-time, and have a modified adjusted gross income (MAGI) of less than $80,000 (or $160,000 for a joint filing couple). If your income is over $80,000 but less than $90,000 (or over $160,000 but less than $180,000 for joint filers), you can receive a reduced amount of the credit, but anyone with income higher than that is ineligible. Additionally, this credit can only be claimed for up to four years, so if your education takes longer than that to complete, you’ll be ineligible for the credit in subsequent years.

2. Lifetime Learning Credit. Those who qualify for this credit will receive up to $2,000 for qualified educational expenses, without the four-year limitation of the American Opportunity Tax Credit. To qualify, individuals must be enrolled at an eligible education institution, taking undergraduate, graduate and professional degree courses – including those designed to help them acquire or improve job skills — for at least one academic period (semester, quarter, etc.) during the tax year they claim the credit. To claim this credit, your income can’t exceed $65,000 as an individual or $131,000 as a joint filing couple. It’s worth nothing that those with a MAGI between $55,000 and $65,000 (between $111,000 and $130,000 for joint filers) will receive a reduced amount of the credit. Unlike the American Opportunity Tax Credit, the Lifetime Learning Credit is not refundable, so you can use it to pay taxes you owe, but you won’t receive any of the credit back as a refund.

3. Tuition and Fees Deduction. This deduction allows students to reduce their taxable income by $4,000 if they owe taxes, by deducting tuition and fees that are required for their enrollment or attendance at an eligible postsecondary institution. Personal, living or family expenses, such as room and board, do not count. Like with the American Opportunity Credit, the student’s MAGI cannot exceed $80,000 ($160,000 if filing jointly). You cannot take this deduction if you are married filing separately.

4. Student Loan Interest Tax Deduction. If you’ve started to make payments on qualifying student loans – those which you took out for the purpose of paying higher education expenses — you can deduct the lesser of what you paid in interest during the year or $2,500 from your taxable income. To be eligible for the deduction, the student’s income cannot exceed $80,000 ($160,000 if filing jointly).

Are scholarships and grants taxable?

Because scholarships and grants may count as income, in some cases they are taxable and should be declared on your tax return. If your scholarship is used to pay for tuition, enrollment fees, books, supplies and school equipment then it is considered tax free. Unfortunately that means money going toward room and board does not count as a tax-free scholarship, as well as any meant to be payments for teaching, research or other services required as a condition for receiving the scholarship or fellowship grant. Before applying for a scholarship, it pays to be aware of how the money will be distributed to you, and if it has provisions on how it can be spent.

Although tax season is almost over, we think that good tax advice should be accessible year-round. Keep reading our tax preparation blog to learn useful tax tricks and tips.