Updated: Mar 17
Taxes are one of the most daunting aspects of adulthood, and there are things to know as students that no one ever teaches you. This is your crash course to understand how U.S. taxes work, what resources are available to assist you, and other helpful things to know when Uncle Sam comes knocking!
Frequently Asked Questions
Q: Why doesn't the government just tell me what I owe?
A: While the government can determine what they think you owe based on your wages and withholdings, your knowledge of your personal circumstances is a valuable tool to potentially decrease tax owed. There are multiple things to take into account when preparing your taxes, such as: your state residency, your marital status, whether you have dependents, if you are a student, and a variety of other possible life events.
TLDR: If the government tried to guess your taxes, you'd probably end up paying more. So, it doesn't guess.
Q: How are taxes calculated?
A: The Form 1040 is the primary form you need to complete your taxes. It walks you through adding up your income, subtracting adjustments and deductions, calculating your tax owed, and subtracting tax credits.
Q: What income do I have to include?
A: While there are minimum amounts for which employers must provide you with a tax form for cash wages paid to you, all income received should be reported on your tax return. Some income is nontaxable, taxed at preferential rates, or taxed at higher rates as a penalty, and the 1040 takes that into account.
Q: What is the difference between a deduction and a credit?
A: Deductions offset taxable income before it is multiplied by the tax rate, while credits offset tax owed dollar-for-dollar. For this reason, credits are preferable to deductions.
Q: What is the difference between the standard deduction and itemized deduction?
A: The "standard deduction" ($12,400 single/$24,800 married) applies to all taxpayers and can be used to offset your AGI and reduce taxable income.
Itemized deductions should only be taken if the total of your miscellaneous expenses (including medical, charitable, state/local tax, property tax, sales tax, and interest) exceed the standard deduction.
Q: Do I have to file a tax return?
A: If your income is less than the standard deduction, you technically don't have to file an income tax return, but you must still file in order to receive any refundable credits and withholdings.
Q: What tax forms and information do I need to file?
A: All taxpayers must have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to file an income tax return. If you use a preparation site, you may need to be prepared to show photo ID and proof of SSN/ITIN.
You will also need any tax forms received from the IRS and employers:
Any W-2s or other income tax forms (Form 1099-MISC, Form 1099-INT/DIV, etc.)
Forms 1095-A, B, or C relating to Health Insurance (if received)
If you have an HSA, Form 5498-SA and Form 1099-SA (if applicable)
Any other tax forms you may have received from the IRS
Students filing as an independent will need:
Form 1098-T and any amounts paid for books/required class materials that weren't purchased through the university and included on your 1098-T. These other amounts could be for merchants like Amazon or a prior students selling their old textbooks--you just need to have kept sufficient records of these payments in order to claim any educational credits with them in case of an IRS audit.
Q: What tax forms do I fill out to file?
A: There are a variety of forms that you may need to use depending on your employment and financial activities, but all residents filing a tax return will use the Form 1040.
Additional forms that may carry through to the 1040 include:
Schedule 1 - Additional Income and Adjustments to Income
Schedule 2 - Additional Taxes
Schedule 3 - Additional Credits and Payments
Form 8863 - Education Credits
Form 8962 - Premium Tax Credits (Marketplace Insurance)
Schedule A - Report Itemized Deductions
Schedule B - Interest & Dividend Income
Schedule C - Profit or Loss from Business (Sole Proprietor/LLC)
Schedule D - Capital Gain or Losses
Schedule E - Real Estate Gain or Losses
Schedule SE - Self-employment Tax
Schedule K-1 - Business Tax Form (Partnership/S-Corp)
Q: What do I need to do with state taxes?
A: You will file a state tax return for every state in which you worked or were a resident. You can search for your state tax forms using the Department of Revenue website for that state.
Q: How do I determine which state I am a resident of?
A: Residency is determined by a variety of things: your current residence, permanent residence, driver's license, vehicle registration, and voter registration. It also depends on your intent: Are you applying to grad schools and want to be considered for in-state tuition? Do you want to run for a political office that requires you to be a resident for a certain time period? Are you a resident of a state that doesn't have an income tax? Take all of these things into consideration as you determine where you qualify for state residency based on that state's residency rules.
Q: How do I determine if I'm independent or a dependent?
A: As the default rule, all taxpayers age 18+ are considered independent of their parents. The exception is for full-time students for which all of the following apply:
Student is age 18-24
Student lived with parents at least half the year (exception for being away at college)
Parents provided over half the student's support
Additionally, parents generally may not claim their married children unless all of the above apply and the couple is only filing a joint return to claim tax withheld.
Q: What is included in support?
A: Support includes living expenses like rent, utilities, and food, as well as education expenses like tuition, books, and fees. Scholarships count as being paid by you.
Q: How do I determine my filing status?
A: Taxpayers can file as Single, Head of Household, Married Filing Jointly, Married Filing Separately**, and Qualifying Widow(er) as determined by the decision chart below.
**Taxpayers who file separately from their spouses are disqualified from many tax credits, so it is generally wise to file jointly unless external circumstances require otherwise.