College Student Taxes: What to Know Before You File
College adds new questions to tax season for students and parents alike. A part-time job, a scholarship, or a tuition statement can all affect a return. Here is what to understand before you file.
By Lilian Oyama, Tax Preparer, FounderReviewed 6 min readDo I need to file?
It depends on how much you earned, the kind of income, and whether someone else can claim you as a dependent. Even when you are not required to file, filing can still make sense if federal or state tax was withheld from your paychecks, because a return is how withheld tax can be refunded.
Who claims the student?
Many college students can be claimed as dependents by a parent. This matters because, generally, whoever claims the student as a dependent is the one who can claim education credits for that student. Coordinate with your family before anyone files.
Form 1098-T and education credits
Your school issues Form 1098-T, a tuition statement showing qualified tuition and related expenses paid and any scholarships or grants. It is a starting point for reviewing two federal education credits.
| Feature | American Opportunity Tax Credit | Lifetime Learning Credit |
|---|---|---|
| Maximum credit | Up to $2,500 per eligible student | Up to $2,000 per return |
| Refundable portion | Up to 40% may be refundable | Not refundable |
| How many years | Four tax years per eligible student | No limit on years |
Income limits and other eligibility rules apply to both credits, and you cannot claim both for the same student in the same year.
Scholarships, out-of-state schools, and first jobs
- Scholarships used for tuition and required fees are often tax-free, but amounts used for room and board can be taxable.
- If you attend school or work in another state, you may need to consider state filing in more than one state.
- When you start a new job, the Form W-4 you complete controls how much tax is withheld. A quick review can prevent a surprise next spring.
