09 Mar Tax returns for a college student

Q. Do tax returns need to be filed for a 19-year-old full-time college student who earned less than $2,500 in a year? The student was listed as a deduction on the parents’ 2016 federal and New Jersey returns.
— Parent

A. We’re glad you’re asking.

A single independent person does not have to file a federal income tax return for 2017 if they had less than $10,400 in income, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

This is the result of one personal exemption in the amount of $4,050 and a standard deduction in the amount of $6,350, he said.

It’s a different story if the single person is claimed as a dependent on their parents’ tax return, he said. In that case, they lose the right to claim themselves on their own return.

“So the 19-year-old in question would have the $6,350 standard deduction to shelter their income,” he said. “New Jersey does not want a taxpayer to file if they have less than $10,000 in income.”

Kiely said the 19-year-old should file either a federal or state income tax return if they had any taxes withheld by the payer. They would be eligible to receive a refund of the withheld tax, he said.

“In 2018, the new tax law eliminates all personal exemptions and increases the standard deduction for a single individual to $12,000,” he said.

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This post was first published in March 2018.