Taxes for College Kids

Students who are in college are always looking at the larger picture of what needs to be taken care of and how they can get the most for their money. That’s why websites like want to help you to figure out what needs to happen in order to get your taxes in order. Here are some tips to think about.

Always check yourself. Too many times, we don’t check our work because we’re just relieved that our taxes are done for another year. Check your work! You may find a mistake that you didn’t notice the first time, or may have forgotten a deduction somewhere.

Always file. Did you work, even just over the summer? That means that you paid in income tax. If you were like me, where you barely make anything, you will get almost everything you paid in back. It may just be a couple hundred dollars, but that’s books, isn’t it?

Deduct that interest. If you have unsubsidized loans (loans that are accruing interest while you’re in school), you may be able to claim some of that interest that is accumulating. The cap is $2,500 a year.

Don’t always go with the EZ. 1040-EZ is usually what dependent college students go for, but if you are going for multiple deductions or other more complicated return issues, you may want to go with the standard 1040.

File early. The FASFA is need based, but it’s also first-come, first served. Financial aid packages are created shortly after the form is turned in. The earlier you and your family file their taxes, the earlier you can file this and get the maximum aid you are eligible for.

Talk to your parents about the money. Many people say it’s awkward to talk with parents about money. But you really need to know how much they are paying of your living expenses and such.  If they are covering at least 50% of those expenses, it is required by law that they claim you as a dependent.  If they are not, then consider filing as an independent. Now, the issue that can occur here is if you are on your parents’ health insurance; claiming independent status can make it so that you lose that as well.

Watch your income. A lot of aid is need based, and with that being the case, make sure that your income isn’t so high (like during the summer months) that it takes you out of the running for some of it. If you’re a dependent, this is also based on your parents’ income, and there’s not really a lot you can do about that.

Being in college means that a lot of times you are overlooked by tax deductions and such (remember the tax credit a couple years ago where if you made less than a certain amount you’d get a $600 tax credit? College kids got shafted there). But, if you are diligent and take the time to research what you’re eligible for, you can get as nice of a return as anyone else.