topic Do I even need to file Federal? State? in Get your taxes done using TurboTax

Do I even need to file Federal? State?

stovinj — Sat, 22 Feb 2025 18:32:27 GMT

Thanks in advance for what is probably a stupid question.

I was doing taxes for my college kid who works part time on campus. (work study)

They are a WA resident but work and school is in Colorado.

Their income for last year was less than $5,000. School job did not take any federal withholdings. State took out like $10. Because no federal withholdings (which I am not sure why, the W4 suggests no exemptions) It is saying they owe taxes. (state is giving a tiny refund)

Based on just this, would they need to even file?

Now, here is the added item which is throwing me off.

Aside from scholarships and grants, I pay for their tuition. I have a 529 plan. They are listed as the beneficiary, but all withdrawals go straight to the school.

TT Deluxe's questions seem to indicate that since they are the beneficiary, they have to pay taxes on those withdrawals for qualifies expenses. Is that correct?

The difference is owing $159 vs $84.

Any suggestions? Corrections of my errors?

Re: Do I even need to file Federal? State?

AmyC — Sat, 22 Feb 2025 22:18:38 GMT

No. The 529 covers room and board along with education expenses. If all of it is used, there is no taxable income and it should not be entered according to IRS Pub 970.

Without the additional income, your student should be below filing limits and not required to file a federal return. You can take a quick quiz, Filing requirement.

Filing a CO return for the refund might make sense.

Re: Do I even need to file Federal? State?

stovinj — Sun, 23 Feb 2025 00:07:09 GMT

Thank you for the response!

Two follow up questions?

1. will it raise a red flag if I filed for them last year despite being under the minimum and not this year?

2. can i file a state income tax with Turbo Tax without filing federal?

(I may not file for the state as it was only going to be a small refund that they were just going to donate.)

Re: Do I even need to file Federal? State?

KrisD15 — Sun, 23 Feb 2025 13:29:32 GMT

1. No, the IRS gets a copy of income documents, such as Form W-2. If the documents the IRS has does not indicate the student has a filing requirement, there should be no red flags. Although we have no control over what the IRS does.

2. Yes. Colorado state does not require a copy of the federal return, so filing only a Colorado state return is possible.