Spring is nearly here, and along with the blooming flowers and longer days, the deadline for filing income taxes quickly approaches. If you’re currently in college, then it could be the first season you have to file taxes yourself.
Unfortunately, our educational system generally does a poor job of teaching you how to file your income taxes, let alone how taxes actually work. As a result fear, anxiety, and uncertainty often surround the tax filing process.
To clear things up, we’ve put together this guide. Below, we’ll explain how to file your income taxes as a college student. We’ll also give a basic overview of how taxes work and answer some common tax filing questions.
Note: This article provides general information about how personal income taxes work in the United States. Due to the complexity of tax law, it’s impossible to cover every situation. This article is for educational purposes only and should not be taken as financial, tax, or legal advice. If you have any questions or concerns, consult a professional accountant.
Do Students Have to File a Tax Return?
If you worked at all during the previous calendar year, then you probably need to file taxes.
Specifically, if you received a Form W-2 from an employer (in the mail or electronically), then you should file taxes. The Form W-2 is simply an official summary of all the income you earned the previous year from a job and all the taxes your employer withheld.
Beyond typical employee situations, you may also need to file taxes if you made more than $400 in the previous year through contract or freelance work. However, things can get murkier and more complicated here, so we recommend consulting an accountant if you’re unsure.
We’ll touch on certain aspects of self-employment tax filing below, but this article mainly focuses on W-2 employees.
How Does Filing Taxes Work?
In theory, taxes aren’t that complicated. The government decides, based on your income, what percentage of your income you need to pay in taxes.
If you work a W-2 job (most people) then your employer has already taken the taxes out. The point of filing a return is to ensure that you haven’t paid too much or too little in taxes.
If you’ve paid too much, then you’ll get a refund. It’s important to remember that this isn’t “free money” from the government. Rather, it’s money you earned that the government is giving back to you. Assuming your employer is taking out the correct amount of taxes from each paycheck, you shouldn’t get a refund at all.
If taxes are so simple in theory, then why can they get so complicated in practice? Mainly, it’s because of all the various tax deductions and tax credits available to you.
For this article, you don’t need to understand tax deductions and credits in too much detail. But here’s a brief overview of each:
What Are Tax Deductions?
Tax deductions are a (legal) way to reduce the amount of your income that gets taxed. This in turn decreases the amount of tax that you owe the government.
There are far too many tax deductions to name here, but the one you’re most likely to encounter as a college student is the standard deduction. This is a sort of “default” amount that the government allows you to deduct, and it’s generally the best option for reducing what you pay in taxes.
You don’t need to concern yourself with the specific amounts of the standard deduction, but you should be aware that it can change based on your marital status. You can learn more here, and also be aware that any tax prep software you use will help you determine which deductions are best for your situation.
To see a list of common tax deductions, check out this article.
What Are Tax Credits?
Similar to tax deductions, tax credits reduce the amount of tax you have to pay. The key difference is that you subtract tax credits from your final tax bill. They directly reduce the amount of tax you owe, as opposed to reducing the amount of income you pay taxes on.
Most tax credits won’t apply to you if you’re in college. The main one to look out for is the Child and Dependent Care Expenses credit, which can apply if you have children or other relatives who depend on your support.
Don’t worry if this sounds confusing; your tax prep software will walk you through the process of claiming any relevant tax credits.
How to Do Your Taxes in College
Technically, all you need to do your taxes are the official forms provided on the IRS website. You download or print the forms, fill them out, and send them in.
In practice, however, almost no one does their taxes this way in the 21st century. We now have tax preparation software that makes this process much easier.
While there are dozens of tax prep programs, they all do more or less the same thing:
- Ask you a series of questions about your life over the past year. This includes things like what you did for work, how much money you earned, and whether you owned a business. Many of the questions also cover demographic details such as your age, marital status, and children.
- Using your responses, the tax prep software determines which deductions and credits you’re eligible to receive. Then, it calculates the amount of your refund (or, less commonly, tax bill).
- Once you’ve reviewed all the information you entered and ensured it’s correct, the tax prep software can send your prepared tax return to the IRS.
- Assuming the IRS accepts your return, you should then receive your refund via direct deposit to the bank account of your choice.
- If the tax software determines that you need to file state income taxes as well, then it will walk you through the relevant process for your state. This works more or less the same as federal income taxes, though the amount you pay varies among states.
Which Tax Prep Software Should Students Use?
If you’re in college, then you probably don’t want to spend lots of money preparing your taxes. That’s why we recommend browsing the IRS database of free tax prep software.
These are all legit companies that the IRS has approved, so you don’t have to worry about scams. And all of them let you prepare and file your federal income taxes for free. However, many of these apps do charge a small fee to file your state income taxes.
Documents You’ll Need to Prepare Your Taxes
Regardless of the tax prep software you choose, it’s handy to have the following documents ready before you start the process:
- Income statements. If you worked as an employee (part- or full-time) you’ll receive a Form W-2. If you did contract or freelance work, then each client who paid you more than $600 is required to send you a Form 1099. Like the W-2, the 1099 is an official record of the money that the client/company paid you.
- Social Security Number
- Information on your dependents, if any. Dependents include any children or relatives who rely on you for support (and meet other specific criteria). To determine if you have dependents, use this IRS tool.
- Account and routing number for the bank account where you want the IRS to deposit your refund.
For many people, tax prep software is enough to prepare and file basic income taxes.
But if you want some more personal guidance, then see if your college or town has a VITA program.
VITA (Volunteer Income Tax Assistance) is a free program that offers basic tax preparation help to qualified individuals.
To qualify, you need to meet one of the following criteria:
- Make less than $57,000 per year
- Have a disability
- Speak limited English
Most college students should qualify based on the income requirement alone. To find a VITA site near you (including 100% virtual VITA services), use this IRS tool.
College Taxes FAQ
We’ve covered a fair bit of ground already, but there are still a few lingering topics. To round out this article, here are answers to some common questions about doing your taxes in college:
Do I need to hire an accountant?
Most likely, you do not.
It’s typically a waste of money unless you have a complicated enough tax situation that the time savings and peace of mind are worth it. I didn’t start using an accountant until after I was out of college and was making a full-time income from freelancing.
Instead, we recommend sticking to tax prep software.
What are tax brackets?
A tax bracket is a range of income that the IRS uses to calculate your tax bill. As you move up the tax brackets, you’ll pay a larger percentage of your income in taxes. You can view a list of current tax brackets here.
Don’t worry about calculating which tax bracket you’re in. Tax preparation software will help you sort things out.
Do I need to file state taxes?
Possibly. If you worked in a state with a state income tax, then you may need to file that along with your federal taxes.
If you have to file state income taxes, your tax preparation software will walk you through the process. As we mentioned above, be aware that many “free” tax prep programs do charge you to file your state taxes.
Also, you may have to file state income taxes if you went to college in a different state and worked a job there. This is true even if you spend the summers living with your parents in a state without an income tax.
What’s the deadline for filing my taxes?
Typically, the deadline to file your federal income taxes is April 15. Though for 2021, the IRS has extended the deadline to May 17.
State tax filing deadlines tend to be the same as federal, though be sure to consult the most current guidance on your state’s website.
Will the IRS put me in prison if I mess up my taxes?
While it’s true that the IRS can put you in prison for not paying your taxes, this is extremely rare.
Unless you’re trying to commit tax fraud or tax evasion (and trust me, you’d know), the IRS only wants you to pay your taxes. Making an honest mistake won’t get you arrested.
As long as it’s clear that you’re making an effort to prepare and pay them honestly, the worst penalty you’ll face for overdue or incorrect taxes is a small fine.
Having said that, you should still take your taxes seriously and file/pay them on-time.
What are some tax scams to watch out for?
Sadly, some people try to take advantage of the fear and anxiety surrounding taxes. Scams are rampant, especially around tax filing season.
Therefore, you should be very skeptical of any communications claiming to be from the IRS. Per the IRS website, they’ll only contact you via phone, mail, or in-person. They’ll never text or email you. And they’ll typically initiate contact by mail before moving to other methods.
For a list of common tax scams, visit this page.
When will I get my refund?
If you’re eligible to receive a refund, you should get it fairly quickly via electronic deposit (assuming you provided bank account info when preparing your return).
To check the status of your refund, use this IRS tool.
Do international students have to file a tax return?
Possibly. If you earned income from a job in the U.S., then you usually will. But if you’re living off savings, investments, or support from your family back home, then you won’t. See this page for more detailed info.
We also strongly recommend consulting your college’s office of international student affairs (or the equivalent) for more specific guidance.
How do my taxes work if I’m self-employed, own a business, or do freelance work?
If you make money from freelancing, contract work, or a business you own, then preparing your taxes can get more complicated.
Don’t panic, though. To start, most tax prep software can help you navigate the complexities of self-employment taxes However, you’ll likely have to pay a bit extra for these “premium” features.
Beyond that, we strongly recommend setting up a consultation call with an accountant when you start working for yourself.
This doesn’t mean you need to keep an accountant on retainer or even pay them to prepare your taxes. Rather, a one-time consultation can help you set up a bookkeeping system, determine if you need to make estimated tax payments, and clear up any other questions you have.
A tax consultation shouldn’t cost more than a couple hundred dollars. I know that seems like a lot, but it’s worth the trouble it will save you in the long run. Trust me on that.
Plus, if you later decide to hire an accountant, then you’ll already have a relationship with one from the consultation. That’s how I ended up working with my current accountant.
Don’t Let Taxes Scare You
I said in the beginning that taxes can be a source of anxiety, fear, and uncertainty. Now, however, you should have the knowledge you need to feel confident in filing your taxes.
Of course, this article has just scratched the surface of all the possible tax situations out there. If you have specific questions, consult an accountant.
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