students taxes

Students don’t have to pay taxes– FALSE

Completing college isn’t an easy feat. It’s expensive, stressful and a lot of hard work goes into earning a degree. Unfortunately, the struggles of college don’t make students exempt from paying federal income taxes. The only factors that can make you exempt are your age, filing status, whether you can be claimed as a dependent, and the amount of your income.

Circumstances where a student should pay taxes

  • Being a student worker or having a summer job means that you have to file, and pay, taxes.
  • Scholarships and grants are also taxable.
  • Other income, such as regular allowances, must be filed and taxed as well.

Being in school does not make you exempt from paying taxes unless you are being claimed as a dependent. Even as a dependent, if you work and receive a W-2, taxes were likely not withheld from your paychecks. Filing your income can pay off later in the form of state and federal refunds. Speak with your employer if you’re unsure about your paycheck being taxed.

In addition to traditional paychecks, some scholarship and grant programs are taxable. You can speak with the institution supplying the grant about whether it’s tax-exempt.

Regular allowances to help pay for school or other living costs should also be filed. Although you are not working, this is a source of income.  

Circumstances where students don’t have to pay taxes

Being claimed as a dependent on your parent or guardian’s taxes can save you a lot of money when you start school.

If you’re a full-time student, you likely qualify for deductions when you file. These deductions can reduce the amount of taxes that you owe, or even provide a refund.

What happens if you fail to file?

By not filing when necessary, you’re putting yourself at risk for audits, penalties, and interest. If you find yourself with a tax liability, you may be eligible for tax relief.

You can take our brief survey to start the qualification process here.

Any new or systemic Liens and/or Levies will also be suspended for the time being.

For taxpayers who are considered “seriously delinquent”, the IRS will suspend any new certifications for the remaining period. Any taxpayer who falls into this category in reminded and encouraged to enter into an Installment Agreement or apply for an Offer In Compromise.

The IRS will not forward any new delinquent accounts to private collection agencies at this time.

Taxpayers have until July 15, 2020 to verify to the IRS they are qualify for the Earned Income Tax Credit or to confirm their income. If the taxpayer is unable to verify their credentials or provide appropriate documents for this credit, they are encouraged to notify the IRS before the deadline. No cases will be denied this credit for failure to provide requested information until July 15.

Case workers will continue business as usual. However, most case work will be conducted remotely (video/over the phone conferences). Any requests for documentation sent by the Office of Appeals should be responded to in a timely manner to ensure a smooth process.

The IRS will continue to take the appropriate measures to stay compliant and protect the applicable statutes of limitations. In situations where certain statutes may be compromised, taxpayers are encouraged to extend such statutes. Otherwise, Notices of Deficiency will be issued by the IRS and similar actions will be pursued to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.

Practitioners are reminded that PPS wait times may be significantly longer, depending on staffing levels and allocations going forward. The IRS will continue to monitor this as situations develop.

“The IRS will continue to review and, where appropriate, modify or expand the People First Initiative as we continue reviewing our programs and receive feedback from others,” Rettig said. “We are committed to helping people get through this period, and our employees will remain focused on these and other helpful efforts in the days and weeks ahead. I ask for your personal support, your understanding – and your patience – as we navigate our way forward together. Stay safe and take care of your families, friends and others.”

Learn how easy it is to qualify for tax savings.

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