Student Tax FAQs

These FAQs are intended to help students obtain a basic understanding of their tax obligations.  They offer generalized information only.  UConn’s Tax & Compliance Department cannot provide students, faculty or employees with individual tax guidance.  For personalized tax guidance and assistance with questions, please contact an outside tax accountant or advisor. 

However, UConn’s School of Business, sponsors a Volunteer Income Tax Assistance (“VITA”) program each year that offers free personalized income tax guidance for certain members of the UConn community.  The VITA program assists UConn’s international community, military community and other members of the UConn community with gross income less than $54,000 with their income tax return filing obligations.  More information about the VITA program is communicated to the UConn community in January or February each year and may also be found at http://accounting.business.uconn.edu/undergraduate/vita-program/

For tax questions specific to international students, please refer to the Nonresident Withholding Tax FAQs available at Nonresident Withholding Tax FAQs.

Do I have to file a Federal income tax return?

Whether or not you need to file a federal income tax return depends on many factors including your total gross income for the year and your filing status.  Gross income means all income you received during the calendar year in the form of money, goods, property, or services that is not exempt from income tax. Common sources of income for students include money from jobs (including work study), certain scholarship Please refer to Do I have to pay taxes on my scholarship, fellowship or grant?), and interest, dividends and capital gains from investments you might have.

For federal income tax purposes, the general rule is that you need to file a federal income tax return if your gross income for the calendar year exceeds the standard deduction plus your allowable personal exemptions.  Therefore, for 2017, you must file an income tax return if your gross income was at least the amount shown in the right hand column of the table below that corresponds with your filing status.

If your tax return filing status is….

AND at the end of 2017 you were….

THEN file an income tax return if your gross income was at least…

Dependent of another taxpayer

Under age 65

Your earned income was over $6,300 OR your unearned income was over $1,050

Single

Under age 65

$10,350

Single

Age 65 or older

$11,900

Head of Household

Under age 65

$13,350

Head of Household

Age 65 or older

$14,900

Married Filing Jointly

Under age 65 (both spouses)

$20,700

Married Filing Jointly

Age 65 or older (one spouse)

$21,950

Married Filing Jointly

Age 65 or older (both spouses)

$23,200

Married Filing Separately

Any age

$4,050

Qualifying widow(er) with a dependent child

Under age 65

$16,650

Qualifying widow(er) with a dependent child

Age 65 or older

$17,900

According to the table, if you were single and under the age of 65, you must file a federal income tax return if your gross income was at least $10,350 in 2017.  Please refer to the instructions for Form 1040 or IRS Publication 501 for more information regarding who must file a federal income tax return.

Do I have to file a Connecticut income tax return?

Whether or not you need to file a Connecticut income tax return depends on your tax residency status, tax return filing status and your gross income for the year.  Your Connecticut tax residency status is either: A) [Full Year] Resident, B) Part-Year Resident, or C) Nonresident.  

You are a tax resident of CT if you lived in the state for the full calendar year or if Connecticut is where you are domiciled.  Domicile means your permanent home or the place you intend to return to whenever you are away.  Therefore, if your permanent home is in Connecticut but you attend college in another state for 9 months out of the year, you are likely still domiciled in Connecticut until you establish a permanent residency somewhere else.  As a tax resident of Connecticut, you will pay Connecticut income tax on your worldwide income regardless of where it was earned or received. 

If you are a part-year resident, that means that you changed your permanent legal residence by moving into or out of Connecticut during the calendar year.  Your tax liability is based on the greater of A) your gross income prorated based on the number of days you lived in Connecticut during the year or B) your total income earned or received from Connecticut sources.

If you are a nonresident of Connecticut, then you are not domiciled in Connecticut nor did you have a permanent legal residence in the state at any time during the current tax year.  Most students who are temporarily in Connecticut for the sole purpose of attending school here, would qualify as nonresidents of Connecticut. Nonresidents of Connecticut are only required to pay income tax on income earned or received from sources within the state of Connecticut. 

For more detailed definitions of each tax residency status, please refer to the instructions for Form CT-1040 at http://www.ct.gov/drs/lib/drs/forms/1-2016/incometax/booklets/ct-1040booklet.pdf

The table below summarizes who must file an income tax return based on tax residency status, tax return filing status and gross income.  You must file a Connecticut income tax return if your gross income was at least the amount shown in the box that corresponds with your tax residency status and tax return filing status.

Connecticut Tax Return Filing Requirement Income Thresholds:

 

[Full year] and Part-Year Residents

Nonresident

Income from sources within and outside CT

CT sourced income only

Dependent of another taxpayer

$15,000

$15,000

Single

$15,000

$15,000

Head of Household

$19,000

$19,000

Married Filing Jointly

$24,000

$24,000

Married Filing Separately

$12,000

$12,000

Qualifying widow(er) with dependent child

$24,000

$24,000

Please note that if your permanent address is in another state other than Connecticut, or if you receive or earn income in another state, you may be required to file an income tax return in that state.  Please consult a tax advisor if you have questions about your state tax return filing obligations. 

Should I file income tax returns even if I don’t have to?
Even if you are not required to file a federal or state income tax return because your income does not exceed the income threshold for your designated filing status, you may want to consider filing a tax return if you had income tax withheld from your wages and you want to get this money refunded to you.  Other reasons to consider filing a tax return even if you’re not required to include reporting and establishing a net operating loss, capital loss, or passive activity loss carryforward or claiming refundable tax credits which you may be eligible for such as the Earned Income Tax Credit, Child Tax Credit, or the American Opportunity Credit
When are income tax returns due?
Federal income tax returns are due by April 15 of the following tax calendar year. If the 15th falls on a weekend day, the tax return is due the first business day following the 15th.  (For example, federal income tax returns for the 2017 calendar year are due by April 16, 2018)
What forms do I need in order to file my income tax returns?
The necessary information and forms needed to prepare an income tax return vary from person to person.  However, some common tax forms received by students include the following:

Form W-2 - If you had a job during the year, your employer should provide you with Form W-2 within the first couple of months after the close of the calendar year.  The Form W-2 shows how much you earned in wages during the year and the amount of federal and state income tax withheld from your wages.  

. Form 1042-S - If you are an international student, you may receive Form 1042-S which reflects the amount of income you earned while in the U.S. and the amount of federal tax you paid on that income and/or any tax exemption you claimed pursuant to an income tax treaty. 

. Form 1098-E- This form indicates the amount you paid on your eligible student loans during the preceding calendar year. You may be able to deduct this interest on your federal and/or state income tax returns.

. Form 1098-T – This is a Tuition Statement which comes from the University.   It shows the amounts billed for qualified tuition and any scholarships or grants you received during the calendar year.  For more information about Form 1098-T, please refer to http://bursar.uconn.edu/1098-t/.

. Form 1099-INT/1099-DIV - If you have investments or bank accounts, your financial institution may issue you these forms to report how much you earned in interest or dividends during the year. 

. Form 1099-MISC – This form is used to report miscellaneous income that is not considered wages or investment income. 

. Form 1099-Q – If you took a distribution from a Health Savings Account (529 Plan) in the preceding year, you will receive this form from the financial institution that administers the plan. This form shows the gross distribution amount, the amount of the distribution that represents earnings on the initial investment, and the amount of your initial investment or cash contribution.
I don’t have a job. Does this mean I don’t have any income?
Not necessarily.  The term “income” can apply to a wide variety of things.  Besides a job, you may have other sources of income such as interests, dividends or capital gains or losses from investments or bank accounts.  Additionally, income does not always have to be in the form of money you receive.  For example, if you receive a grant or scholarship, part or all of that grant or scholarship might be taxable as income depending on your individual circumstances. Please refer to Do I have to pay taxes on my scholarship, fellowship or grant?
What is income tax withholding and how much is being withheld from my paycheck?
Money that you earn from employment (including work study positions) is taxable income.  Your employer may be required by law to withhold federal and state income taxes from your regular paychecks.  The federal and state governments require that you pay taxes on your income as you earn it and not in a lump sum at the end of the year. Therefore, employers withhold taxes from your wages as you earn them and send that money to the federal and state governments, respectively, on your behalf.   When you file your federal and state tax returns for the year, the amounts of federal and state income taxes that were withheld from your wages are credited against your computed income tax liabilities. If the amount of tax withheld exceeds your computed tax liability, then you will get the excess refunded to you.  If the amount of tax withheld is less than your computed income tax liability, then you will need to send a payment to the government with your tax return.  In some instances, if you underpaid your tax liability, you may be subject to interest and penalties on the balance due.

The amount of federal and state income taxes that are withheld from your paycheck each period is based on the Form W-4 (Federal) and Form CT-W4 (CT) that you filled out and submitted to the payroll department.  These forms utilize a formula to estimate the amount of tax withholding that is needed to cover your projected income tax liabilities associated with your wage earnings based on your filing status and the number of dependents you will claim on your tax return.  These forms can be adjusted and resubmitted to the payroll department at any time during the year.

The amount of tax that your employer has withheld from your wages will appear on your regular pay statements and will be summarized at the end of the year in a tax form known as Form W-2, which your employer will send to you.  Form W-2 should be retained and used to prepare your tax return. 

If your employer does not withhold tax, it does not mean that your earnings are not subject to tax.  Money that you earn from your job is reportable on your tax return, regardless of whether your employer withholds tax. 
What is the difference between income tax withholding and payroll tax withholding?

Both income and payroll taxes are assessed based on the wages you earn.  These taxes are both withheld from your wages as you earn them.  However, there are two very important distinctions between these two types of taxes – Who pays the tax and what does the tax pay for?

Income taxes are withheld from your wages to pay for your personal income tax liability for the year based on your total taxable income.   You, as the employee, are 100% responsible for paying income taxes.  Payroll taxes are often referred to as FICA, FUTA or Social Security taxes.  Payroll taxes are contributions that employees AND employers are required to make to fund Federal programs for Social Security, Medicare and Unemployment insurance. Employees are required to contribute an amount equal to 6.2% of their wages (up to maximum of $7,886.40 for 2017) to the Social Security Fund and 1.45% of their wages (with no maximum) to the Medicare Fund.  Employees pay their allocable share of payroll taxes by having it withheld from their wages and their employer then remits the contributions (i.e. payroll taxes) to the federal government on their behalf.

Employers must make a matching contribution equal to 6.2% of the employees’ wages to the Social Security Fund wages (up to maximum of $7,886.40 for each employee in 2017) and 1.45% of the employees’ wages (with no maximum) to the Medicare Fund.  Therefore, employers and employees are both responsible for payroll taxes on employee wages.

Do I have to make estimated income tax payments?

The federal and state governments require that you pay taxes on your income as you earn it and not in a lump sum at the end of the year.  Making estimated tax payments is a method of paying tax on income that is not already subject to withholding such as certain scholarship or fellowship income, investment income, self-employment income, business earnings or rental income. The need to make quarterly estimated tax payments is based on each person’s individual tax situation.  Generally speaking, if you do not have significant sources of income other than wages, and you have adequate income tax withheld from your wages, then you will not need to make estimated tax payments.  If you have significant non-wage sources of income, then you may be required to make estimated tax payments.

The federal and state governments will assess interest and penalties on underpayments of tax when a taxpayer fails to make adequate tax payments to the government on his/her income as it is earned. The tax year is broken down into 4 quarters with quarterly tax payments due April 15th (Qtr 1), June 15th (Qtr 2), Sept. 15th (Qtr 3), and January 15th of the next year (Qtr 4). Taxpayers must pay in 25% of their projected total tax liability for the year with each quarterly installment.  Please see the instructions for Form 1040-ES for more information. 

ExampleAn individual taxpayer is self-employed and has no other sources of income.  He expects to be profitable and projects his total federal income tax liability for the year to be $20,000 and his total Connecticut income tax liability to be $8,000.  If the taxpayer makes 4 equal federal income tax payments of $5,000 and 4 equal CT income tax payments of $2,000 by April 15th, June 15th, September 15th and January 15th of the next year, he will avoid federal and Connecticut underpayment interest and penalties.  

Because it can be difficult to determine how much tax you will owe for the year and, thus, how much you need to pay in quarterly tax payments, there are safe harbor rules that you can follow in order to avoid underpayment penalties and interest.

Federal Safe Harbor Rules: If you make estimated tax payments equal to 90% of your actual current year tax liability or 100% of the tax liability you reported on your prior year income tax return, then you will not be subject to federal interest and penalties on any underpayment of tax.  However, if your Adjusted Gross Income (AGI) reported on your prior year tax return was over $150,000 and you filed Married Filing Jointly or Single, then you must pay in either 90% of your actual current year tax liability or 110% of your prior year tax in order to be safe harbored from underpayment interest and penalties.

Connecticut Safe Harbor Rules: If you make estimated tax payments equal to 90% of your actual current year tax liability or 100% of the tax liability you reported on your prior year income tax return (if the return covered the full tax year), then you will not be subject to Connecticut interest and penalties any underpayment of tax.

If your income is not earned ratably throughout the year, you may want to consider making estimated tax payments based on an annualized method.  This method is more complicated and is not covered under this FAQ section.

Do I have to pay taxes on my scholarship, fellowship or grant?
It depends.  Generally, scholarships, fellowships and grants are not taxable to the recipient to the extent that they pay for (i) required tuition and fees; and (ii) books, supplies and equipment required for your courses.  If your scholarship, fellowship or grant exceeds the costs of required tuition, fees, books, supplies and equipment, then the excess is taxable income, which you are required to report to the IRS on your income tax return.

IRS Publication 970 and Proposed Treasury Regulations 1.117-6(c)(2) indicate that payments that cover room and board, travel, insurance and medical expenses (including student health fees) are not considered required expenses.  Therefore, a grant or scholarship that covers any of these items may be taxable to you.

It is the sole responsibility of the student to report and pay taxes on the taxable portion of any scholarship, fellowship or grant that he/she receives.  Consistent with IRS guidance, the University does not withhold taxes on the taxable portion of scholarships, fellowships or grants except in limited circumstances involving international students.

Please refer to IRS Publication 970: Tax Benefits for Education (2013) for additional information.
Where can I get detailed information about the amounts of my scholarship, tuition and fees?
The best sources of information will generally be your fee bill and award letter.  Your fee bills will reflect the actual payments you made (whether by cash, loan or other arrangement) during the calendar year for tuition and fees. Your fee bills will also reflect when any scholarships, grants, or fellowships were received by the University and applied against the cost of your education.

Another form that may be helpful to refer to is Form 1098-T, which is issued by the University to most students during the first month of each year for the preceding calendar year.  The University is required to send a Form 1098-T to most students that paid for “qualified educational expenses” in the preceding tax year.  Qualified educational expenses include tuition and enrollment fees as well as books, supplies and equipment that are required for your courses. However, the University is not required to prepare Form 1098-T for every student even if they paid qualified educational expenses.  For example, the University does not have to prepare a Form 1098-T for students who are not United States residents for tax purposes, or for students whose qualified education expenses are waived entirely or paid for entirely with scholarships.

If the University prepares and sends a Form 1098-T to you, then the amount in Box 2 of the form will show the amount that the University billed you in the preceding year for qualified (required) tuition and related expenses.  Amounts billed do not represent amounts paid by you during the calendar year. If you received a partial tuition waiver, then the amount reported in Box 2 will be the “net” amount you were billed after the waiver.  Box 5 of Form 1098-T shows the amount of scholarships or grants (other than tuition waivers) you received during the year. Please note that when claiming educational credits and deductions on your income tax return, you will need to report amounts paid (not billed) for qualified education expenses when determining your allowable tax credit or deduction.

For more information about Form 1098-T, please refer to http://bursar.uconn.edu/1098-t/.
What education related tax credits or deductions might I be eligible to claim on my tax return?

We cannot determine your eligibility for tax credits and deductions.  Eligibility is determined based on each person’s facts and circumstances and tax situation.  We can provide a general overview of the educational credits and deductions that you may be eligible for.  Please refer to IRS Publication 970 or consult a tax advisor for more detailed information. 

Generally speaking, the taxpayers who can claim tax credits or deductions for education are the persons who actually paid for the qualified educational expenses (e.g., the student’s parent(s) in most instances) if the expenses were for themselves, their spouse or their dependent.  However, the dependent child can potentially claim a credit or deduction for qualified educational expenses paid on his/her behalf if the taxpayers who can claim them as a dependent did not claim a personal tax exemption for the dependent child on their tax return. If a student pays for qualified education expenses but he/she is your dependent, then you can claim the tax credits or deductions for the expenses paid for by your dependent.  If someone pays for a student’s qualified education expenses but cannot claim them as a dependent (e.g. grandparents or aunt/uncle), then the student is treated as having received the money and paid for the qualified education expenses himself/herself.    In all instances, only one taxpayer can claim a credit for the same qualified educational expenses paid during any given tax year.

Qualified educational expenses” means 1) required tuition and fees that must be paid as a condition of enrollment; and (ii) books, supplies and equipment required for your courses.  It does not include room and board, travel, insurance or medical expenses including student health fees.

American Opportunity Credit – This is a Federal income tax credit. The credit amount is equal to 100% of the first $2,000 qualified educational expenses paid for and 25% of the next $2,000 of qualified educational expenses paid for during the respective tax year. The maximum credit that can be claimed is $2,500 per year for each qualifying student.  A qualifying student is one that is enrolled at least half-time in a program leading to a degree or certification. Up to 40% of the credit may be refundable which means that if the tax credit exceeds your federal income tax liability, you can get up to 40% of the credit (up to $1,000) back in the form of a cash refund.  This credit is available only for the first four years of the student’s postsecondary education (i.e. College).  Therefore, this credit is NOT available for tuition paid for graduate school or any education pursued after an undergraduate degree. The credit may be limited or disallowed if the taxpayers’ modified adjusted gross income is too high.  The credit is completely disallowed once the taxpayers’ modified adjusted gross income exceeds $180,000 if married filing jointly or $90,000 for single filers.  

. Lifetime Learning Credit – This is a Federal income tax credit. The credit is equal to 20% of the first $10,000 of qualified education expenses paid for during the tax year.  The maximum credit that can be claimed is $2,000 per year for each eligible student.  This credit is nonrefundable, which means that if the allowable credit exceeds your federal income tax liability, then you do not get the excess amount back as a cash refund. The credit is available for qualified educational expenses paid for any postsecondary education or courses to acquire or improve job skills.  The student does not need to be enrolled in a degree program. There is no limit on the number of years this credit can be claimed for each student. The credit may be limited or disallowed if the taxpayers’ modified adjusted gross income is too high.  The credit is completely disallowed once the taxpayers’ modified adjusted gross income exceeds $131,000 if married filing jointly or $65,000 for single filers.

Tuition and Fees Deduction – Instead of claiming either the American Opportunity or Lifetime Learning Credit, a taxpayer can opt for taking a deduction up to $4,000 for qualified education expenses paid during the tax year. This deduction is not allowed if your modified adjusted gross income is greater than $160,000 for married filing jointly or $80,000 for single filers.

Student Loan Interest – Federal and some states allow a deduction for interest paid on a student loan.   The student loan must have been taken out solely to pay for qualified education expenses and can’t be a loan from a related person or employer. That maximum deduction amount allowed is $2,500 per tax year. This deduction is not allowed if your modified adjusted gross income is greater than $160,000 for married filing jointly or $80,000 for single filers.

529 Plan Contributions – Some states offer tax credits or deductions for contributions made to Higher Education Savings Accounts (529 Plans).  “Qualifying distributions” from 529 Plans are generally tax exempt for federal and state income tax if the distributions are used to pay for qualifying educational expenses and the distributions do not exceed the qualifying educational expenses for the year.

Notes:  Taxpayers can only claim either the Lifetime Learning or American Opportunity credit for each student for each tax year. Furthermore, tax credits and deductions cannot be claimed for qualified educational expenses that were paid for with tax-free scholarships, fellowships, grants or that were paid for or reimbursed pursuant to an employer provided educational assistance plan.

Why aren’t student health fees considered to be expenses that are required for enrollment?
The term “qualified tuition and related expenses” refers to those charges that are required for attendance or coursework at the University, and do not include optional charges such as room and board or insurance costs.  IRS Publication 970 explicitly states that “medical expenses (including student health fees)” are not qualified tuition and related expenses.  Even though the University requires all students to maintain health insurance, many students are covered by a personal insurance policy or a plan carried by their parents, and they do not pay the Student Health Fee. 
Is the health insurance that I get as a Graduate Assistant or Graduate Intern taxable?

No.  Graduate Assistants and Graduate Interns receive wages for providing teaching or researching services to the University.  They are offered medical and dental insurance coverage through the Connecticut Partnership Plan.  If GA’s elect health insurance coverage under this Plan, they will be required to pay premiums based on their elected coverage level.  As of July 1, 2015, the State of Connecticut established a separate Cafeteria Plan within the meaning of IRC Sec 125 exclusively for Graduate Assistants, Fellows, and Interns at UConn, which allows them to use pre-tax wages to pay for health insurance premiums.
Therefore, the premium amounts will be deducted from the GA’s paycheck on a bi-weekly basis and will be excluded from their taxable wages for both federal and state income tax purposes.

For more information about the health and dental benefits provided to Graduate Assistants please visit UConn’s HR website at http://hr.uconn.edu/ct-partnership-health-benefits/

Is the health insurance that I get as a Graduate Fellow taxable?

It depends on whether you or the University is paying for the cost of the insurance.  Graduate Fellows are not employees of the University and, therefore, do not receive wages from the University.  They typically receive a grant from the University or from an outside organization to conduct research for their own academic advancement. They are offered medical and dental coverage through the Connecticut Partnership Plan.  If the Graduate Fellows elect insurance coverage under this plan, then they will be required to pay premiums based on their elected coverage level.  The cost of the premiums will be charged to the Fellows’ fee bill on a semester by semester basis. If Graduate Fellows pay for the insurance premiums using their own personal funds, then the health insurance is NOT a taxable benefit to them.  However, if the department sponsoring the Fellowship uses departmental funds to cover the cost of the insurance, or if part of the Fellowship Award is used to pay for the health insurance premiums, then the total cost of the insurance coverage provided to the Fellow is reportable as a taxable benefit.  A fellowship award is only tax free under IRC Sec 117 if the recipient is a candidate for a degree and the award is used for “qualified tuition and related expenses". The term “qualified tuition and related expenses” refers to those charges that are required for attendance or coursework at the University, and do not include optional charges such as room and board or insurance costs.  IRS Publication 970 explicitly states that “medical expenses (including student health fees)” are not qualified tuition and related expenses. 

For more information about the health and dental benefits provided to Graduate Fellows please visit UConn’s HR website at http://hr.uconn.edu/ct-partnership-health-benefits/

I won a contest or I was given a prize by my department. Why do I have to fill out tax forms?
Generally speaking, all prizes and awards are taxable income. This is true regardless of whether the prize is in the form of cash, Husky Bucks or a gift card.  It is the recipients’ responsibility to report the value of prizes and awards received on his or her tax returns.

As a prerequisite for receiving the prize or award, the University may ask you to complete and sign a    Form W-9, Request for Taxpayer Identification Number and Certification. If the recipient properly completes Form W-9, then the University is not required to withhold any taxes on the prize or award.  If the aggregate value of prizes or awards received by any person is less than $600 for a calendar year, then the University has no IRS reporting obligations with respect to those prizes and awards given to that recipient.

If you are not a United States resident for tax purposes, then you will not be able to complete Form W-9.  In this case, the University is required to withhold federal income tax at a rate of 30% on the value of the prize or award and report this event on a Form 1042-S.  An exception exists in very limited circumstances where the student is a resident of a country that has a particular type of tax treaty with the United States.
Who do I contact if I have more questions?
Since the University cannot advise you with regard to your personal tax situation, you should contact your personal accountant or tax advisor with any additional questions.  Additionally, the School of Business Accounting Department sponsors a Volunteer Income Tax Assistance (“VITA”) program each year, and information about that program is generally sent out in January or February.  You might also consult Publication 970: Tax Benefits for Education (2013) for generalized information from the Internal Revenue Service.