Tax Obligations

• For federal tax purposes, if a person exceeds the income limits as set by the Internal Revenue Code, the individual must file a federal tax return regardless of family status. Whether or not the individual is a student is also irrelevant to federal tax obligations. For 2011 tax filing, the unearned income limit was set at $950. The earned income limit was $5,700. Furthermore, this means that a student who may be claimed as a dependent on the federal tax form of another taxpayer must still file an individual tax return if the student receives income beyond the IRS limits.
  
  

Dependent Status

• If the student may be legally claimed as a dependent on the federal income tax return of another taxpayer, income limits for filing requirements differ. The earned income limit was $7,100 for the 2010 tax year, and unearned income was limited to $2,350. Being claimed as a dependent on the tax return of another affects the amount of the refund and types of credits that may be claimed as well as the standard deduction allowed. Those students claimed as dependents must complete a worksheet to figure the standard deduction for their individual circumstances, and they cannot claim a personal exemption on a federal income tax return.
  
  

Common Credits

• Credits a student with a child might be eligible for, if someone else cannot claim the student on a federal income tax return, would include the child tax credit, child and dependent care expenses, and education credits. The federal tax system also permits a deduction for tuition and fees. In addition, unless the student's income exceeds the federal limit, $35,535 in 2010 for a taxpayer with one qualifying child, an earned income credit may also be forthcoming.
  
  

Reporting Income

• Sources of income determine how the student must file taxes appropriately under federal guidelines. For example, if income consists totally of state and federal financial assistance, this would not be considered earned income. However, if the student works and earns a paycheck, taxes should be withheld from take-home pay. Alternatively, if a taxable scholarship is a source of income, this too must be reported. Therefore, in many instances, a student with a child is considered an obligated taxpayer and required to file a tax return.