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Are Work Study Earnings Taxed?

By Zach Skillings
Zach Skillings is the Scholarships360 Newsletter Editor. He specializes in college admissions and strives to answer important questions about higher education. When he’s not contributing to Scholarships360, Zach writes about travel, music, film, and culture. His work has been published in Our State Magazine, Ladygunn Magazine, The Nocturnal Times, and The Lexington Dispatch. Zach graduated from Elon University with a degree in Cinema and Television Arts. Full Bio
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Annie has spent the past 18+ years educating students about college admissions opportunities and coaching them through building a financial aid package. She has worked in college access and college admissions for the Tennessee Higher Education Commission/Tennessee Student Assistance Corporation, Middle Tennessee State University, and Austin Peay State University. Full Bio
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Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania. Full Bio
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Updated: December 1st, 2023

If you hold a work study position, you may be wondering if you have to pay taxes on your income. The short answer is yes, but there’s a few details you should know about. Read on to learn about how work study affects your financial aid eligibility,  tax credits you can use, and how to report work study earnings on your tax returns. 

See also: Does financial aid count as income?

Does work study income affect my financial aid eligibility? 

The big benefit of work study jobs is that they do not affect students’ financial aid eligibility. Earnings from work study positions won’t count against you when you file for FAFSA the following year. This means you shouldn’t receive a lower financial aid package because of your work study job. 

Meanwhile, income from regular non-work study jobs does count towards your FAFSA and may prevent you from receiving the same amount of financial aid in the future. If you’re weighing the benefits of a work study position versus a higher paying job in the private sector, this is one factor to keep in mind.

Do you have to pay taxes on work study?

Yes, earnings from work study jobs are taxable income. This means you should include income from your work study position when filing your taxes. Fortunately, you’re exempt from FICA taxes (Social Security and Medicare taxes) if you’re enrolled in 6 or more credit hours or you’re working on campus. However, you’re still subject to paying federal and state income tax on your work study earnings.

Are all work study jobs taxed? 

The general rule of thumb is that if you hold a work study position, you’re subject to paying taxes on your income. However, there are certain work study positions that are completely tax-exempt. These include positions sponsored by the National Health Service Corps Scholarship Program and the Armed Forces Health Professions Scholarship Program. If you’re majoring in a health-related field, these two programs are worth checking out. 

Can I use any tax credits or deductions?

If you’re using earnings from your work study job to pay for tuition, you’re eligible for the American Opportunity Tax Credit (AOTC). If you qualify for the AOTC, you can receive a maximum annual credit of $2,500. You can fill out information regarding this credit when you file your tax returns. You may also qualify for the Lifetime Learning Credit (LLC), but you aren’t allowed to claim this credit the same year you use the AOTC. 

Also read: Necessary FAFSA Materials: What you need to apply

How do I report work study earnings on my tax returns?

Your employer, which is usually your college, will provide you with a W-2 form that contains all the information you need to report work study earnings on your tax returns. Fortunately, you don’t have to pay to file your income taxes from work study. The IRS provides a free tax filing tool you can use when it comes time to do your taxes. You must file your taxes by April 15 every year, but make sure to give yourself plenty of time to meet this deadline. Consult your financial aid office or a tax professional if you have further questions about how work study affects your tax situation. 

Keep reading: CSS Profile vs. FAFSA: What you need to know

Key Takeaways

Key Takeaways

  • Yes, work study earnings are taxed and should be reported on your taxes each year
  • Not all work study positions will be subject to the same tax laws
  • Be sure to look into any tax deductions that you may be eligible for when you are filing your taxes, such as the American Opportunity Tax Credit and the Lifetime Learning Credit
  • Your employer should provide you with a W-2 form that will be essential for properly filing your taxes
Key Takeaways

Frequently asked questions about work study earnings

Is it better to do work study or get a job?

Both work study and getting a job on your own have their pros and cons. If you get a job on your own, you will be able to work as many hours as your schedule allows. However, the money that you make will affect the amount of financial aid you receive as it will be considered income. The money you make will not affect the amount of financial aid you receive, but the hours you work also cannot exceed the maximum amount that is set for you.

What is an example of work study?

Work study jobs can vary depending on the college or university you are attending. Some colleges may have students work as tour guides, in on-campus libraries, or in other on-campus positions. You should check to see what your school offers in regard to work study jobs, especially if you think it may be something that is crucial to paying for school.

Do I report work study income on FAFSA?

Yes, work study earnings should be something that you put on your FAFSA. However, they won’t be counted in your total income when your FAFSA is calculated. That means whatever you make through the work study program won’t be factored into your financial aid.