IRS Rules on “Obscure” Student Income

Delivering newspapers, babysitting, private tutoring and even lawn mowing are all a part of the inevitable side jobs some may take as a college student. It’s a source of much needed, extra cash and also empahsizes responsibility and preparedness for the “real world” upon graduation.

Albeit to most college students, part of this responsibility includes paying taxes on these services.

The IRS has very specific qualifications as to what counts as taxable income for college students.

According to the IRS, the following types of revenue that students often profit from are considered taxable:

 Self-Employed Income
 Income on an Investment
 Payment for Service Rendered
 Fellowships and Scholarships

For instance, if you receive a scholarship or fellowship for $10,000 and use $9,500 for fees, books and tuition, you are left with $500. Naturally, you’d use that for personal expenses. According to the IRS, the leftover $500, if used for personal spending, is 100% taxable.

Whether or not the IRS should tax income earned by students is still a hot topic. It may seem unfair to tax students who carry both work and school, and live off a ramen diet. Either way, it’s important as a student to understand the tax laws sooner rather than later.

For more useful tax advice, please subscribe to our blog where you can choose to receive email updates daily. If you’re interested in the more technical aspects of IRS procedures, visit our other blog, or the JG Tax Group website to find a wealth of helpful information.