Tax Minute

MYTH ABOUT STUDENTS

This week we're going to be talking about tax myths. So, what's a myth, Robin Hood is a myth. Goldilocks is a myth, and someone who knocks on your door, smiles and announces, I'm from the IRS and I'm here to help you, that's a myth too. Many students think that because they are in college, they don't have to pay taxes. Wouldn't that be nice? But it's also a myth. The fact is, there is no special tax status given to any college student. They're subject to tax on all their income just like mom and dad are. On the other hand, they may qualify for special tax credits, like the American Opportunity Tax Credit and the Lifetime Learning Credit and qualifying distributions from their 529 Plans are tax-free. In addition, if you are a student and will earn less than $12,550 this year, do yourself a favor and make sure your employer does not withhold any Federal taxes from your pay. If you make less than this amount, which is the standard deduction for 2021, you will owe no tax and have no filing requirements. For Massachusetts you have no tax filing requirement if you make less than $8,000.

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