Students: Tax Info & FAQs

Learn more about your federal tax responsibilities as a college student, and find out if you qualify to claim any of the education-related tax benefits. #Taxletes

Tax Return Filing Requirements for Students

Many students have trouble determining whether they are required to file a federal income tax return, especially if a parent can claim them as a dependent on their tax return. Students can quickly determine whether they are required to file a tax return by using the IRS's Interactive Tax Assistant tool. Note, even if a student is not required to file a tax return, doing so may enable the student to receive a tax refund. Access the tool through the following link:
 

 

File Your Taxes for Free

If you are required to file a tax return, or if doing so would entitle you to a tax refund, strongly consider using the IRS Free File program to safely and conveniently file your taxes from the comforts of your home. Individuals who made $72,000 or less in 2020 are eligible to use the Free File program. Find out more information on our Free File program page or click the link below to go right to the Free File Lookup tool---a quick way to find a free offer based on your specific circumstances.

Scholarships & Grants

Nontaxable Portion of Scholarships & Grants

Generally, you are not required to pay taxes on funds you receive in connection with a scholarship, a fellowship grant, or other grant. However, you must satisfy the following two conditions for the funds to be nontaxable:

  1. You attend an educational institution that maintains a regular faculty and curriculum, and one that normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and

  2. The funds received are used to pay for tuition and fees required for enrollment or attendance at the educational institution (or used for fees, books, supplies, and equipment required for courses at the educational institution).

 

Taxable Portion of Scholarships & Grants

According to the IRS, the following scholarship and grant amounts are subject to tax and must be included as part of your gross income on your tax return:

  • Funds used for incidental expenses (e.g., room and board, travel, and optional equipment); and

  • Funds generally received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant).

 

Education-Related Tax Incentives

Available Tax Credits

An education tax credit helps subsidize the costs of higher education by reducing (dollar-for-dollar) the amount of tax owed on your tax return. If the credit reduces your tax liability to less than zero, you may be entitled to receive a refund. There are two types of education credits available: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Learn more about these two credits in the FAQ section below.

Use the IRS's Interactive Assistant tool to determine if you are eligible to claim an education credit, and whether you can claim a tax deduction for qualified education expenses. Access the tool using the fo