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Tax for students – What you need to know

It’s not the most fun subject to talk about, but it’s an important one – tax. If you have a part-time or casual job, even while you’re still a student, chances are you’ll need to know about tax.

But what even is tax? Think of it this way. Tax is a small amount of money that gets taken off your pay. The government uses this money to provide important services and infrastructure, like roads, hospitals, and even schools – put simply, tax improves our quality of life.

Do I need to pay tax as a student?

If you have a job, the short answer is yes, you probably need to pay tax.

You need to pay tax on your income once you make more than a set amount each year. Remember that this is combined income – so if you have two jobs and your income from both added together is above the limit, you’ll need to pay tax.

Here are the current tax free threshold amounts (aka how much you can earn without needing to pay tax) as of February 2024:

  • Australia: AU$18,200
  • New Zealand: None – you must pay tax on all personal income in NZ.
  • UK: £12,570
  • Ireland: None – but the amount of tax you pay may be reduced by tax credits.
  • United States: None – but the amount of tax you pay may be reduced by tax credits.
  • Canada: CA$15,705

Just to make it even more difficult, there are also some other things that count towards your income total, such as some government payments and even scholarships in certain circumstances.

Tax can be complicated, so if you have a job and are making any money, we suggest you do your research or talk to someone who can help you figure it all out.

How do I pay tax?

Thankfully, paying tax is simple – you usually don’t even have to do anything. In most cases, your employer will automatically pay tax on your behalf. If you receive a payslip, you should be able to see how much tax comes out of each pay. Easy!

If you own your own business or do freelance or contract work, you will be responsible for calculating and paying tax yourself. Again, this can be tricky to wrap your head around, so read your obligations carefully or contact a professional for help.

Do I need to file a tax return?

Again, the answer is probably yes!

Lodging a tax return adds up your income for the year, and then the government checks how much tax you’ve already paid. If you paid more tax than is due, you’ll get some money back. If you paid less, you’ll have to pay the extra. Most people tend to get a small return each financial year, so filing a tax return is probably worth the effort.

There are set dates you must lodge a tax return by each year:

  • Australia: 31 October
  • New Zealand: 7 July
  • UK: 31 October (paper) or 31 January (online)
  • Ireland: 31 October
  • United States: 15 April
  • Canada: 30 April

You will need to submit a tax return every financial year for as long as you are earning money. It’s important to make sure you submit it on time each year, or you might be missing out on some extra money you could get back. Even worse, if you owe money, not knowing and not paying could land you in hot water down the track.

In most cases, you can fill out and lodge a tax return yourself. If your financial situation is more complicated, you can visit a registered tax agent and they can lodge a tax return for you on your behalf – but keep in mind you’ll need to pay a fee for their service.

How do I lodge a tax return?

If you do lodge your own tax return, there are a few general steps to follow:

  1. Gather any relevant documents. What you need will vary based on your circumstances and where you live. It can include bank statements, receipts, government forms, statements from your employer, or any other physical proof of income.
  2. Declare your income. You will need to declare all your income for the financial year. Don’t forget, this can include things like government payments and interest. If you’re filling out your tax return online, most of this information should already come filled in for you. If your employer has sent you a payment statement, double-check to make sure the figures in your tax return match the statement.
  3. Claim any expenses or deductions. If you have any work-related expenses, you may be able to claim their cost and receive some of the money back. These can include things like uniforms and laundry costs, tools, travel expenses, and other things. They must be relevant to your work, and you can’t have been reimbursed by anyone for them (for example, if your employer pays for your tools on your behalf, you can’t also claim them as a work-related expense). You will also need to keep a receipt or record of purchase. This step is totally optional, but it can be nice to get some money back. But be careful when claiming deductions, because if you get it wrong you may have to pay some money back.
  4. Submit! Triple-check all of the values you’ve entered, then submit your tax return. You should hear back from the tax office in a few weeks, and they’ll tell you what to expect and any next steps you might need to take.

Remember, these are just the most basic steps. The exact steps for your return will depend on your personal circumstances and where you live, so once again, we suggest reading more on your government’s website, asking an adult for help, or seeking assistance from a professional if you’re unsure.

Want to know more?

Staying on top of your finances can save you from future headaches, and can sometimes come with the bonus perk of a few extra dollars in your bank account.

If you want to find out more about money, we have heaps of resources on budgeting, superannuation, and more on our website.

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