Many college students need to file tax returns, so it’s important to know how taxes and tax credits apply to you. Your education-related expenses may yield deductions and credits that can lighten your financial burden. While we have some suggestions in the basic overview below, your best bet is to visit the IRS website or consult a tax professional.
Who needs to file taxes?
Determining if you need to file taxes depends on how much money you earned in the prior tax year and how much was withheld for taxes. If your earned income is over a certain limit as determined by the IRS, you may have to file taxes regardless of how much was withheld.
U.S. federal taxes
The federal government makes it easy for students to comply with the law. The 1040A and 1040-EZ forms, which apply to most college students, are readily available online at IRS.gov and can be completed easily as long as you have your W-2 (and possibly 1099) forms. These are the forms employers provide the government showing your earnings and any witholdings.
If you are a non-resident (out of state) student and earn income while at school, consult the official MA state-tax website to determine whether your income requires you to file a non-resident return. If you also earned money at home, in some cases, you may file both resident and non-resident state tax returns in your respective states.
Terms to know
Deductions: A deduction is a dollar amount that reduces that amount of income on which you are taxed.
Credits: A credit reduces the amount of income tax you may have to pay. Education tax credits are available to help with the costs of higher education. Tax credits are available to taxpayers who paid for their education, their spouse's education or their dependent's education at an eligible educational institution.
1040A and 1040-EZ: The most commonly used federal tax forms are the 1040A and 1040-EZ. Most students qualify to file with the 1040-EZ, but you cannot make adjustments to your income (claiming a credit or taking a deduction) if you use this form.
1098-T: When you have paid qualifying educational expenses, your college must provide you with a 1098-T to document your expenses. This helps determine your education credits (as well as any tuition or fee deductions that may be allowed). MIT generates 1098-Ts for all eligible students. If eligible, you will be able to access it through your MITPAY account beginning in late January.
Qualifying educational expenses: The IRS considers the following to be qualified education expenses for the student loan interest deduction: tuition and fees; room and board; and books, supplies and equipment. Some of these expenses will not show up on your MIT Student Account, so you may need to track these expenses on your own.
Qualified education expenses for tax-free scholarships and fellowships include tuition, fees and course-related expenses. Room and board are not considered qualified education expenses for tax free scholarships and fellowships. For more information on qualified education expenses visit the IRS website.
Benefits and deductions worth knowing about
The tuition and fees deduction can reduce the amount of your taxable income by up to $4,000. You will need to complete Form 8917 to claim this deduction.
If you are already in student loan repayment and your modified gross income is less than $80,000, there is a deduction allowed for paying interest on that loan. You cannot claim a student loan interest deduction on the 1040-EZ.
- The 1098-E forms are student loan interest statements that are sent directly to you from your lender if you have paid $600 or more during the tax year. If you have questions, please contact Campus Partners/Heartland-ECSI at 800-334-8609.
This tax credit can help pay for the first four years of college if you attend at least half time. The AOTC provides up to $2,500 per student per year, or up to $10,000 over four years.
The LLC can help pay for any level of college or education that advances job skills. It provides up to $2,000 per tax return per year.
Important: To claim either of the above tax credits, you must file a Form 1040 or Form 1040-A and complete Form 8863. The 1098-T provides information needed to complete Form 8863.
More comprehensive information is found on the IRS website which includes an Interactive Tax Assistance tool which may help you determine what credits or deductions are available to you.
The information provided on this site may be used for general guidance purposes only with the understanding that MIT is not engaged in rendering legal, accounting, tax or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. MIT recommends that students consult their tax advisors concerning the application of tax laws to their particular situation.
Additional Tax Resources
The Volunteer Income Tax Assistance (VITA) program provides free tax help to people who fall into the following categories: those who earn $54,000 or less and/or those with disabilities or limited English speaking taxpayers who require assistance preparing their tax returns.
The Free File Alliance is a nonprofit coalition of tax software companies working with the IRS to help Americans prepare and e-File their federal tax returns at no cost. At least one free software option is available to those earning $64,000 or less. Free software options can be found at Free File at IRS.gov.
The International Student Office provides information relevant to international tax issues. They also provide free access to tax preparation software.
Each year, the National Association of Student Financial Aid Administrators (NASFAA) creates a guide of federal tax benefits for students and families to use while preparing their taxes. It is a comprehensive guide of higher education tax incentives that can help to maximize both credits and deductions.
The Center for MIT Entrepreneurship offers student innovators and entrepreneurs legal guidance. While they may not be able to provide complex tax advice, they may be able to assist student entrepreneurs in finding and selecting qualified local private counsel.