Ah, student life. One of those things you remember fondly through the haze of long-past memories…unless, of course, you’re still in school right now. Or you have gone back to school. In that case, you might have a slightly different kind of haze to deal with: tax preparation as a student. Here’s what you need to know about doing your taxes while paying tuition.
First, if you’re young and in school full-time, you may still be considered a dependent of your parents. This means you can’t take many deductions, but it also means that you don’t have to do your taxes at all; your parents will do them for you. You qualify as a dependent in this situation if you’re 24 or younger, a full-time student, not married and providing less than half of your own income. It’s possible for students who qualify as dependents to choose not to be counted that way, or for their parents not to count them, if desired. This allows the student to take more deductions, but requires them to do their own taxes and prevents the parents from claiming child tax credits and dependent exemptions. This trade-off is usually decided by family preference.
Assuming you aren’t a dependent (or aren’t being claimed as one), the next step in doing your taxes as a student is to know the exemptions, deductions and credits you can claim. For instance:
- If your income is below $75,000 ($150,000 if you’re married) and you’re not married-filing-separately, you can deduct up to $2,500 of interest paid on your student loans.
- If you’re a full-time student working toward a degree, you can take the American Opportunity Credit, which allows you up to $2,500 off your taxes. This credit is especially helpful because it can get you up to $1,000 even if you aren’t paying taxes.
- If you’re taking a few classes but not working on a specific degree, you can take the Lifetime Learning Credit, which gets you up to $2,000 back. This credit has no limit on re-use, so you could take continuing education classes for a decade or more and claim it every year.
- If you’re a graduate student over 25 and live in the US more than half the year, you may qualify for the Earned Income Credit. Based on your income, this credit can get you up to $5800, and the income threshold rises if you have children.
All of these credits can be claimed for yourself—and if you’re paying tuition for a child of your own, some of them (in particular the Lifetime Learning credit) can be claimed for that child, on top of a dependent exemption.
The other main point to remember here is that just because you’re a student doesn’t mean you don’t have to file and pay taxes. Even if you’re a dependent, the taxes still have to be done, and once you’re no longer a dependent, doing them is your responsibility. As nice as it would be for the IRS to let taxes go for full-time students, it isn’t going to happen, and ignoring taxes while you’re in school can lead to audits, levies, tax debt problems and other issues no one wants to deal with. So if you’re paying tuition, don’t forget that you still have to pay taxes, too.