Tax Information for Students
Category: College Preparation
This check list is in the following categories:
This checklist is helpful to those who are currently enrolled in college, or would like to know how obtaining higher education could help reduce their federal taxes and/or provide a credit from the IRS. If you are attending and accredited
college and seeking a degree, this is the tax information you will need when filing your tax return.
Always verify your financial records with the information listed on the 1098-T provided by your college.
If your records differ from the college and you have receipts that show proof, you can use your figures instead.
Determine who is allowed to claim the dependency exemption
College students who are between 18 and 23 on the last day of the year are usually claimed as a dependent on their parent's tax return...
- if they are enrolled at least half-time for 5 months of the year,
- they have not lived on their own for more than half of the year, and
- they are not paying for all of their support.
The person who claims the dependency exemption is also the one who claims the education credit for a student.
Total income from employment
If tip income is received, and shown as "allocated" on the W-2, you will need to provide a record of actual tip income -- listed in a journal by date received; otherwise, the allocated tip income will have to
be claim as income whether it is correct or not.
Amount received from federal grants or financial aid.
This money is NOT taxed. It is also not included when figuring the amount of education credit.
If the scholarship was sent directly to the college, the amount will be applied toward tuition. This will reduce the amount of expense that can be used in figuring the education credit. If the scholarship was sent to
the student, they can choose to apply it toward their education expenses or claim it as income and pay the tax.
Unless the maximum education credit is already being received, it is usually better for a student to pay tax on scholarship income than apply it toward their education and thereby reduce their education credit.
Amount paid for tuition and fees
This is the total amount paid during the year by the student or someone else, regardless of what year the education is received. Tuition paid with a loan is considered as being paid with cash and can be included in figuring
the education credit or deduction.
Amount paid for books and supplies
Students are able to include the cost of purchasing books, supplies, and equipment REQUIRED for the course when figuring their education tax credit. A computer and its components is only included in these expenses if
it is required in order to attend the class.
Always keep receipts for purchases. Keeping the class syllabus with your tax records is a good idea if it shows the required textbooks.
These may be deductible if the education is required by an employer. In either case, if scholarship funds are sent directly to the student, they can be applied toward parking or other living expenses. This allows more out-of-pocket
dollars to be applied toward tuition, fees, and education expenses. Scholarship money used in this way is taxable, but if other income is low your tax rate will likely be 10% or you may owe no tax at all. Showing more
cash paid for tuition, means a larger Education Tax Credit.
Travel mileage (If education is required by your employer as a condition of employment)
The mileage traveled to school may be deductible, if you can exceed your standard deduction by itemizing. For this reason, most young college students cannot deduct their mileage to school even if the education is required
by their employer.
If a mileage deduction is likely, you will need to keep a mileage log. It must include the date and destination, purposed of travel, and total miles each day. Do not include mileage to or from your home. Only mileage
between the school and work is allowed. Travel back home is not deductible.