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Tax Concerns for the College Bound: Part 3 – Working Students

Any students who plan on working while taking classes should consider their filing requirements:

Filing Requirements: Dependents who earn less than $6,200 at their jobs may not need to file a federal tax return and therefore are not required to withhold federal taxes.  If a student is not required to file a federal return they are also not required to file a Minnesota return or withhold Minnesota tax from wages.

Out of State: If a student goes to school in a state other than Minnesota but is a dependent or considers Minnesota to be their home then they would have nonresident filing status for earned income in the state where they attend school.  States outside of Minnesota have different filing requirements for nonresident income earned in their state.  Here are a few state requirements that may come in handy.

Scenario – A Minnesota resident that can be claimed as a dependent and is going to school and earning wages in the following state:

  1. Wisconsin – A Wisconsin tax return is due if the student earned more than $1,000 from a Wisconsin sources.
  2. North Dakota – Per a reciprocity agreement, any wages earned from a company in North Dakota will be taxed as if they were earned in Minnesota and the Minnesota filing requirements apply.
  3. South Dakota – South Dakota does not have an income tax
  4. Iowa – If Iowa sourced income is $1,000 or more an Iowa return will be due. Exception: if the total income of the student is under $9,000 they do not have to file in Iowa.
  5. Illinois – Students must file in Illinois if they earned income from any Illinois sources.
  6. Indiana – Students must file in Indiana if they earned income from any Indiana sources.
  7. Michigan – Per a reciprocity agreement, any wages earned from a company in Michigan will be taxed as if they were earned in Minnesota and the Minnesota filing requirements apply.
  8. California – If a student has both California source income and total income that is more than the standard deduction ($6,200) they would be required to file in California.
  9. New York – If a student has New York source income and adjusted gross income in excess of $3,100 they are required to file a return in New York.

DISCLOSURE: For the sake of the discussion, these requirements are simplified, do not take into account any unearned income and are based on the published figures for the 2014 tax year.  If you have specific questions on your tax situation please consult your tax preparer.


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