How Work-Study Affects Your Taxes

Your college job may have an unexpected impact on your taxes and financial aid.

By Christopher Geno

It may not be the most fun or exciting part of going to college, but smart students pay attention to their finances. If you are eligible for work-study and choose to take a job, there are some financial implications you should know about.

Are work-study earnings taxable income?

Yes. Earnings from a work-study position are subject to state and federal payroll taxes. FICA taxes (Medicare and Social Security) will also be taken out of your earnings unless you:

  • Are currently enrolled in college full time, and
  • Currently work less than half time.

If you file your own taxes, you must also claim these earnings. Your employer will give you a W-2 that will list all the required information.

Are there tax credits and deductions for work-study?

There are no specific tax credits or deductions to take advantage of for work-study. However, if you’re using work-study to pay for tuition, that tuition is eligible for the American Opportunity or Lifetime Learning tax credit. Tax credits can’t be claimed for tuition paid for by tax-free income like grants and scholarships, but tuition paid for by work-study is eligible.

Does work-study income affect financial aid eligibility?

Work-study earnings up to your award limit do not affect your financial aid eligibility. For example, if you were awarded $3,000 in work-study, then you would not count work-study earnings up to $3,000 when you fill out next year’s FAFSA.

You will report the work-study earnings on your FAFSA, but in a separate box that doesn’t change your estimated family contribution (EFC).

What if I have a non-work-study part-time job?

Part-time jobs are not the same as work-study jobs. If you are not awarded work-study as a part of your financial aid package and find a part-time job, that income will affect your financial aid eligibility when you fill out your FAFSA.

If you have a work-study job and meet your maximum award limit, you may be able to continue to work, but you will have to treat the rest of the income you earn as non-work-study earnings until the next school year.

Quick Tips

  • Remember that even if you file your own taxes you are still a federal dependent if you are under 24 or unmarried and do not support a child. You can learn more about your dependency status with the Federal Student Aid Office.
  • You can still claim tax credits for tuition paid for by a non-work-study part-time job.
  • Always check with your college’s financial aid office if you have questions about taxes and aid eligibility.

People Who Read This Article Also Read:

What is Work Study?
Work-Study vs. Part-Time Jobs: Weighing the Pros and Cons
6 Most Popular Work-Study Jobs
Student Work-Study Allowance Program: the Basics
Working in College

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