Disclaimer: All information is based on California tax regulations. If you are an out-of-state student, refer to your state’s tax laws.
With tax season finally over, it may feel like a weight has been lifted off your shoulders. However, it never hurts to start preparing early for next year’s tax season. Some things to consider as you plan include: what job(s) you might have, your filing status and which credits you may be eligible to claim.
Each year, the window for filing usually starts during the last week of January and closes on April 15, unless otherwise extended by the IRS. For example, this year, some Southern California residents were granted an extension due to the recent wildfires. The April 15 deadline is also the deadline to make payments if you owe federal or state taxes.
It’s important to know how to file and understand the benefits associated with your filing status. Many students are still considered “qualifying children,” meaning they are filed as dependents. This is going to get a little in-depth, but hopefully it helps when you’re filing next year.
To be considered a qualifying child, you must meet the following requirements:
- Be age 24 or younger and a full-time student for at least five months of the year.
- Not provide more than half of your own financial support.
- Be biologically or legally related to the person claiming you.
If you fall under these requirements, then you are considered someone who “can be claimed as a dependent.” In this case, you are not eligible to claim education-related credits like the American Opportunity Credit or Lifetime Learning Credit.
Understanding your income and how it is taxed is also key. For students with on-campus jobs or small businesses that generate more than $400 in income, it’s important to account for taxes that may not be withheld directly. For example, income received as a student assistant is often not taxed, which could affect your return.
Students who earn money through freelancing, online selling or even music performances are all considered self-employed and are subject to self-employment tax, which is 15.3%. When dealing with self-employment taxes, you should consult with professionals if you are unsure about how it will affect your adjusted gross income (AGI).
Once you’ve determined your filing status and your income, you are ready to file. There are tons of great resources for college students to e-file for free including, TurboTax, H&R Block and the Volunteer Income Tax Assistance (VITA) program–which I personally recommend as a VITA volunteer.
Getting a head start on your taxes can save you time, stress and even money–so future you will definitely thank you.