If you’re wondering whether you should file your taxes, the answer is YES! Even if you only work over the summer or part-time during the school year, you may still be able to take advantage of tax credits and deductions. You aren’t required to file if your income is under $13,850 for tax year 2023.

Before you start, ask your parents if they will be claiming you as a dependent. Typically, your parents can claim you as a dependent if they provide more than half of your support, which is often the case for college students. If they plan to claim you on their taxes, you will need to answer “yes” on your return when you are asked if someone else can claim you as a dependent.

Next, you’ll need to gather your W-2s and a list of your college expenses (tuition bills, credit card bills for textbooks, etc.). You can file with a paper form or online – the IRS offers “Free File” options. It might be a good idea to sit down with your parents while you complete your return in case you have any questions, especially if this is the first time you’ve filed your own tax return.

The American Opportunity Tax Credit (AOTC)
The AOTC allows students to claim up to $2,500 of qualified college expenses for their first four years of post-secondary education. This includes tuition, fees, textbooks, supplies, and other equipment. To be eligible for AOTC, the student must:
– Be pursuing a degree or other recognized education credential
– Be enrolled at least half-time for at least one academic period beginning in the tax year
– Not have finished the first four years of higher education at the beginning of the tax year
– Not have claimed the AOTC or the former Hope credit for more than four tax years
– Not have a felony drug conviction at the end of the tax year
You must have received a Form 1098-T Tuition Statement from an eligible educational institution.

The LLC allows students or parents to claim a credit of up to $2,000 for qualified education expenses. There is no limit on the number of years this credit can be claimed, but you can only claim this or the American Opportunity Credit. The Lifetime Learning Credit may be useful to graduate students or those who are not working toward a degree.
To claim the LLC, you must meet all three of the following criteria:
– You, your dependent, or a third party pay qualified education expenses for higher education.
– You, your dependent, or a third party pay the education expenses for an eligible student enrolled at an eligible educational institution.
– The eligible student is yourself, your spouse, or a dependent you listed on your tax return.

Once you are making payments on a qualified student loan (usually after you graduate), there is a special deduction allowed for the interest you’ve paid on your loan in the past year. Your lender(s) should provide a statement in the mail or electronically each January that outlines the interest you’ve paid. This deduction can reduce the amount of your income subject to tax by up to $2,500.
If you have questions, or you’re not sure if you’re eligible for these credits and deductions, you can use the IRS’s Interactive Tax Assistant to find out if you may be eligible. You can also read the full descriptions of the credits and deductions, including income limits, on their website.

• The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Tax Credit (LLTC) can be generous tax breaks for college costs.
• The AOTC can provide a credit of up to $2,500 per student for the first four years of college if income levels are below $160,000 (married, filing jointly) or $80,000 (single). The credit phases out above these income levels, and up to 40% can be refundable.
• The LLTC can provide a credit of up to $2,000 per tax return for an unlimited number of years for any qualifying degree or non-degree course. Only one LLTC can be claimed per year, and income limits determine eligibility. The LLTC cannot be claimed for the same student and year as the AOTC.

If income levels are too high for the AOTC or LLTC, parents can elect to forgo claiming their student as a dependent, potentially allowing the student to claim the credit on their own tax return. The Tuition and Fees Deduction is another option for qualified expenses.

Tax credits can help you save money on college expenses. There are two main tax credits available for college costs: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Tax Credit (LLTC). These credits directly reduce your tax bill, unlike deductions, which only lower the amount of income subject to tax.

The American Opportunity Tax Credit (AOTC) covers 100% of the first $2,000 of qualifying college expenses and 25% of the next $2,000, with a maximum credit of $2,500 per student. You can claim the AOTC if your student is in their first four years of college and if your income is below $160,000 (if married filing jointly) or $80,000 (if single). The credit is phased out above these income levels. You can claim the AOTC for multiple eligible students in your family.

The Lifetime Learning Tax Credit (LLTC) can provide up to $2,000 per tax return, based on 20% of up to $10,000 of qualifying higher-education expenses. This credit is available for an unlimited number of years for any degree or non-degree course. You can only claim one LLTC per year, regardless of the number of students in your household. For 2023 and 2024, the income limits are $180,000 (married filing jointly) and $90,000 (single taxpayers). The credit is phased out above these income levels. You cannot claim both the American Opportunity Tax Credit and the Lifetime Learning Tax Credit for the same student in the same year.

Before 2021, there was an option to claim a deduction of up to $2,000 or up to $4,000 of qualified tuition and mandatory enrollment fees, depending on your income.

The AOTC covers 100% of the first $2,000 of qualifying college expenses and 25% of the next $2,000, with a maximum credit of $2,500 per student.

You can claim the AOTC if:

• Your student is in their first four years of college.
• Your income is below $160,000 (if married filing jointly) or $80,000 (if single).
• The credit is phased out above these income levels.
  • You can claim the AOTC for multiple eligible students in your family. For example, if you have three kids in their first four years of college, you could potentially qualify for up to $7,500 of American Opportunity Tax Credits.
  • Up to 40% of the AOTC amount is refundable, meaning you can receive some of the credit even if your federal income tax bill is reduced to zero.

The LLTC can provide up to $2,000 per tax return, based on 20% of up to $10,000 of qualifying higher-education expenses. This credit is available for an unlimited number of years for any degree or non-degree course.

You can only claim one LLTC per year, regardless of the number of students in your household.

For 2023 and 2024, the income limits are:

• $180,000 (married filing jointly)
• $90,000 (single taxpayers)

The credit is phased out above these income levels.

You cannot claim both the American Opportunity Tax Credit and the Lifetime Learning Tax Credit for the same student in the same year.

Other Options

• Before 2021, there was an option to claim a deduction of up to $2,000 or up to $4,000 of qualified tuition and mandatory enrollment fees, depending on your income.

Tuition and Fees Deduction has been extended through the 2020 tax year.