Getting a tax refund? Tips and help for filing college students’ federal tax returns

Part of a HMRC Self Assessment tax return. (Credit: Images_of_Money)

Part of a HMRC Self Assessment tax return. (Credit: Images_of_Money)

By the end of January you should have received the paperwork you need for filing your state and federal tax return. Like most starving students you’re probably expecting a tax refund. Do you know all requirements for filing? Tax laws change every year and it can be pretty hard to keep up. Let’s take a look at some of the tax regulations that may apply to college students.

Income forms to look for

If you worked during 2013 you should be receiving a W-2 form that summarizes your wages and tax withheld. Even if you didn’t earn much, it is a good idea to file a tax return so that you can get a refund of federal and state income tax withheld.

Some employers may have treated you like an independent contractor. If so, then they didn’t take out any taxes. Instead of a W-2 you’ll get a form 1099MISC. If you get one of these then you’ll want to get help in filing your taxes because extra forms will be required. Unfortunately, extra taxes may apply too. Check with your campus student services to see if free tax help is available.

Independent contractor vs. employee

Employers like to treat workers as independent contractors because it saves them money. They don’t have to pay for Social Security, Medicare, worker’s compensation, unemployment insurance or disability for the worker. But it’s not the best deal for a worker who is truly an employee.

How do you know if you’re an employee? Ellen Feig explained in an October 2007 article for titled, “Employee vs. Independent Contractor: Differences You Need to Know.”

The deciding factor comes down to control. According to Feig, “When the hiring party controls the way work is carried out and a product is delivered, the relationship between the parties is employer/employee. If an employer does not have authority over how a party accomplishes his or her work but simply give requests an outline, the relationship between the parties is that of hiring party/independent contractor.”

Are you a dependent?

Another form that you might receive is a 1098T which lists the tuition and fees that you paid for college. Payment of these fees may make you eligible to receive a tax credit on your federal tax return. Tax credits are good because they lower your tax bill and some are refundable, meaning that you’ll get money on top of your regular tax refund.

There are three credits that you might qualify for:

  • American Opportunity Tax Credit (AOTC)
  • Lifetime Learning Credit
  • Hope Scholarship Tax Credit

If your parents are paying for most or all of your college expenses, then they will want to file for the tax credit. They can do this even though the 1098T came to you and has your name on it. The credit is also available if you are using student loans to pay your tuition. Your parents can only apply for an education credit if they claim you as a dependent on their tax return.

The rules that govern which tax credit to take and how it applies to you are too involved to go into in this article. But you can get some background in Troy Onink’s January 16, 2013, article for titled, “You Can Get $10,000 Per Child In College Tax Credits, Thanks To The Fiscal Cliff Deal.”

Parents who make too much money won’t qualify for an education tax credit. If they claim their child as a dependent then the tax credit is lost. If they don’t claim their child then, “[…] your child can claim the American Opportunity Tax Credit on his or her tax return,” Onink said.

Know your status

If your parents claim you as a dependent on their tax return then you don’t get to claim a personal exemption for yourself on your own tax return. Even though this means you pay more income tax and get a smaller refund, your parents will make out better for having you on their tax return.

Emily Driscoll explained taking exemptions in a March 18, 2013, post for titled, “Tax Tips for College Students to Avoid Mistakes.”

Quoting Nick Rizzi, CEO of SmartTax, Driscoll reported, “If students do not claim themselves as a dependent, they can also receive deductibles for tuition, fees, textbooks and other expenses.”

Students who don’t qualify for the education credits can use the tuition and fees tax deduction to lower their taxable income by as much as $4,000. They can do this even if they don’t itemize deductions.

How has filing your taxes changed now that you’re in college? Tell us in the comments below.

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