How to Make Money as a College Student: Tax Management Tips

As the cost of living and tuition rise, many aspiring young professionals wonder how to make money as college students. Having an income during studies has become a necessity for many, not just a choice. And as if finding a job isn’t difficult enough, students also need to be aware of their tax obligations.

Many students believe that the money they make is exempt from taxation. That’s far from the truth, as the tax obligations depend on the type and the amount of income, not your status as a student. We’ll explain all that in this article, giving you some ideas on how to make money as a college student and associated tax tips.

Key Takeaways

• There are many different ways to make money as a college student, including both traditional employment and independent contracting.
• Common methods include on-campus jobs, part-time local work, online freelancing, tutoring, selling products, and leveraging passive income streams.
• You need to pay taxes if the income you made as a student passes a certain threshold.
• How much you can make before having to pay taxes depends on the type of income and your filing status.
• Keep detailed records of your income and expenses to help you file taxes, apply for loans, pass audits, and so on.

6 Practical Ways to Make Money as a College Student and Tax Policy

Students may feel pressure to work for various reasons, including to support their lifestyle in college or to pay for tuition. The income they generate is often subject to taxation, though the treatment varies.

If students find jobs as traditional employees, employers handle most of their taxes. However, the process is more complex for income earned from independent and freelance work, as well as side gigs and hustles.

Let’s take a look at different ways for college students to make money and the associated tax implications.

1. On-Campus Jobs

On-campus jobs are one of the most straightforward methods of making money as a college student. The main benefit of these jobs is convenience, as students work on campus and often have flexible hours. This allows them to accommodate their schedule and work without their studies being affected.

Some examples of on-campus jobs include working in the library, a campus coffee shop, or being a research assistant.

The Federal Work-Study program provides part-time jobs to students in need of financial aid. It’s important to note that this income is taxable and should be reported. Students will receive Form W-2, Wage and Tax Statement, from their employers, which details their total earnings and tax withheld for the year.

They’ll also receive pay stubs, which can be used as proof of income for various purposes. For instance, you may use them as supporting documentation when applying for your Free Application for Federal Student Aid (FAFSA).

2. Part-Time Local Jobs

Working part-time jobs locally but not on campus is another common way to earn money in college. There is a vast variety of jobs, including working for a local retailer, in a restaurant, as an office assistant, and so on. These can offer invaluable real-world experience in addition to a steady paycheck.

Even if you’re working a part-time job, you’re still legally an employee, which means that your employer is responsible for withholding federal income tax, Social Security, and Medicare tax from your paycheck. These withholdings will be detailed on your pay stubs and Form W-2.

You can use the information on pay stubs to estimate your annual earnings and prepare for tax filing in advance, as well as to verify your Form W-2. Even if your income is below the filing threshold, you should still file a tax return, as you may be eligible for a tax refund.

3. Online Freelancing & Remote Jobs

Online freelancing and remote jobs offer plenty of opportunities for students to make money in various fields, including graphic design, web development, writing, and social media.

However, when you work as a freelancer, you’re considered an independent contractor and not an employee. This means that you’re responsible for paying income and self-employment taxes in full (both the employer and employee’s share of Social Security and Medicare), as there is no employer to withhold a portion from your paycheck.

You’ll typically receive Form 1099-NEC, Nonemployee Compensation, from all the clients who have paid you more than $600 in a year. You also won’t receive Form W-2, so you’ll use the information from Forms 1099 to file your return and pay freelance tax. Even if you don’t receive Form 1099, you still have to report income as a student.

4. Tutoring or Teaching

Tutoring allows students to leverage their academic strengths and make money by teaching what they’ve mastered in college. It’s a popular method of making money as a college student, as it takes little effort and can be more lucrative compared to other options.

Income from teaching and tutoring is considered self-employment income in most cases. This makes it similar to online freelancing and remote jobs in terms of income tracking and tax obligations. You’re responsible for filing and paying self-employment taxes if your net earnings are $400 or more in a year.

One of the benefits is that you may qualify for deductions for business-related expenses. For example, you may leverage certain home office deductions or deductions for supplies.

5. Selling Products or Crafting

Selling products that you made or flipping items can be a great way to make money as a college student. You can sell products through your own website or leverage platforms like Etsy and eBay to take part in e-commerce.

If you sell your products online, and your revenue exceeds a certain threshold, you may receive Form 1099-K from the platform or the payment processor. This form details the gross amount of transactions.

In addition to that, you need to keep detailed records of your expenses (e.g., the cost of products or shipping). That way, you’ll be able to subtract your expenses from your gross sales and determine the actual profit. When paying taxes, you’re only taxed on your profit.

6. Passive or Semi-Passive Income

Passive and semi-passive income typically require a lot of upfront work to set up. After that, these income streams work on their own and bring you money with little to no input on your end. Common examples include having a blog or a YouTube channel that keeps bringing in money long after you’ve stopped uploading.

It’s important to note that passive doesn’t mean tax-free. Any passive income that you generate needs to be reported. Depending on the source of income and the amount, you’ll likely receive Form 1099-MISC or Form 1099-NEC.

Just like with other forms of self-employment, you’re responsible for monitoring your income and expenses and paying self-employment taxes.

How Much Can a College Student Earn Before Paying Taxes?

How much a college student can earn before paying taxes depends on several factors, including their gross income, filing status, and whether they can be claimed as dependents. The IRS takes these factors into account and sets specific income thresholds.

For example, if you’re not claimed as a dependent, and your filing status as a student was single at the end of 2024, you had to file a tax return if your gross income was $14,600 or more. If you earned less than that and your employer withheld taxes from your paycheck, you should still file a return, as you may get a refund.

If you were claimed as a dependent, you had to file a tax return if:

• Your unearned income (taxable interest, ordinary dividends, capital gain distributions, etc.) was more than $1,300.

• Your earned income (salaries, wages, tips, taxable scholarships, etc.) was more than $14,600.

• Your gross income (earned plus unearned income) was more than the larger of $1,300 or earned income up to $14,150 plus $450.

You can be claimed as a dependent if you’re a full-time student and:

• You’re under 24 years of age.

• You live with your parents for more than half a year when not in college.

• Your parents pay for more than half of your living expenses.

You also have to file a tax return if you made more than $400 in net earnings from self-employment.

Most of these figures are adjusted from time to time, making it important to stay updated with the latest changes. Moreover, due to the precise nature of the thresholds, it’s critical to maintain accurate records of your income and expenses. This helps you avoid making mistakes that can result in penalties and even legal issues.

How to Track and Document Your Income as a Student

A simple and effective way to document and track earnings as a student is by using Paystub.org and our generators. We developed several robust tools that allow you to create essential income, business, and tax documentation. These can help you perform anything from billing clients to tracking your income and expenses.

Here are the generators that we offer:

• Pay stub generator
• Form W-2 generator
• Form 1099 generator
• Invoice generator

Employers typically issue Form W-2 and pay stubs for student workers. However, that’s not always the case, as issuing pay stubs isn’t legally mandated in some states. In that case, you can generate them for yourself to improve your record-keeping.

Moreover, if you’re doing side hustles or other forms of independent work, you’ll likely be responsible for creating most of the documentation yourself. Our invoice generator can help you bill clients professionally and accurately, while keeping track of your earnings and having proof of income.

You don’t need it just for filing your tax return, but also when applying for apartments, seeking car loans, submitting the FAFSA form, and more.

Final Thoughts

In addition to knowing how to make money as a college student, you also need to be aware of the associated tax responsibilities. The process of filing taxes depends on how much you made and in what way; independent work typically requires a more thoughtful approach than the jobs you do as an employee.

Since college students have to pay taxes, you’re required to keep meticulous records of your income, expenses, and taxes withheld. This includes all pay stubs, tax forms, freelance invoices, and other documentation that you receive and issue. If you want to simplify these operations and make record-keeping a breeze, give our generators at Paystub.org a go!

How to Make Money as a College Student FAQs

1. Do college students have to pay taxes?

College students have to pay taxes if they earn taxable income. Whether income is taxable depends on the type of it and on the amount. The filing requirements also depend on the student’s filing status and whether they are claimed as a dependent.

2. Does FAFSA look at student income?

Yes, FAFSA looks at student income when determining their eligibility for student aid. However, there’s an income protection allowance (IPA), ensuring some of the income doesn’t get taken into account. Income from Federal Work-Study isn’t counted when determining financial need, either.

3. How do I track freelance income as a student?

You can track freelance income as a student by keeping detailed spreadsheets with information about your clients, project details, and payments. You should also meticulously manage your invoices, which you can create using our invoice generator at Paystub.org.

4. Do part-time jobs provide pay stubs?

Yes, employers usually provide pay stubs for part-time jobs. Pay stubs detail your gross and net income, giving you insight into your total earnings, tax withholdings, and take-home pay. This helps you maintain accurate records and prepare your tax return.

5. What if I don’t get a tax form from a side hustle?

Even if you don’t get a tax form from a side hustle, you’re still required to report that income to the IRS and pay taxes on it if needed. It’s your responsibility to keep track of your income and file taxes, even if you don’t have all the necessary forms.