(BPT) - Are you in college, or a recent graduate getting ready to file your taxes for the first time? You probably have many questions, such as how to file, whether you can get any tax breaks, and did you receive all of your stimulus payments. It can be daunting to tackle your taxes for the first time, but the good news is there's help and answers available.
Here are several frequently asked questions, along with the answers you'll need to get started:
1. How do I know if I am a dependent?
The first step in preparing your own taxes requires a conversation with your parents or guardians. Ask whether they'll be claiming you as a dependent on their return this year. If they do, this will affect some credits and deductions you may claim on your return. Additionally, if they claim you as a dependent, your parents will be able to claim credits for your educational expenses.
Generally, a parent can claim you as a dependent until age 19, but if you're a full-time student, they can claim you as a dependent until you’re 24. There are other requirements, including how much financial support you and your parents provided during that year. Most often, a full-time college student can still be considered a dependent if they’re under 24 and don’t generate more than half of their own financial support. For example, if you’re paying your own rent and food during the year, your parents might not be able to claim you as a dependent. If your parents can claim you as a dependent, you will need to know this for your own tax return.
2. Do I need to file?
If you made more than $12,400 from working last year, you are required to file a tax return. If your earned income was less than that, you aren’t required to file but may want to still consider filing to get a refund on the federal and state income taxes that were withheld from your paychecks. You also must file if you have unearned income more than $1,100.
If your income was from a side hustle, like working for DoorDash, and at least $400, you’ll also need to file a return for self-employment income. The good news is that you may have some expenses that count as deductions associated with your gig work.
3. Will I get a stimulus payment?
The most recent, third stimulus package includes payments for all dependents, a key difference from the first two stimulus payments. All dependents claimed on a person’s tax return will qualify the parent(s) to receive an up to $1,400 benefit for each qualifying person in their household, including children 17 and older and adult dependents, such as college students. College students who were dependents don’t need to do anything, as your parents will receive the stimulus money. You can’t claim your own stimulus payment if your parents claimed you as a dependent.
If you are a college student or graduate who was on your parents’ return last year but will file your own for this year, you can get a stimulus payment when you file by claiming the Recovery Rebate Credit.
What tax credits or incentives are available for students?
Here are several tax credits and incentives that students or their parents may be eligible for:
These education credits and deductions can be complex and it’s important for you to coordinate which tax breaks you claim. For example, the IRS doesn’t let people double up on these benefits, but depending on the kind of academic program, what year the student is in, income and other factors, a student may qualify for one or more of the benefits. And a family will want to plan ahead if they have multiple students in school at the same time or a student plans to attend more than four years. To help you answer which education tax break is the most financially beneficial for you, an H&R Block tax pro can help you understand and navigate each of the education credits to create your best outcome.
If you are confident you understand all of your available education credits and prefer to prepare your own taxes, the most common tax forms students need can be filed for free with H&R Block Free Online.