College students have been using work study as a way to earn additional income for school for many years. While work study provides a regular stream of income, it is not actually classified as a job because it is a form of financial aid provided for needy students. Despite this classification, though, receiving work study income can have an impact on your federal income tax liability at the end of the year. For this reason, it's important to know why work study is significant and how to include this school related tax on your tax form. 

Qualifying for Work Study

Since work study is a form of federal financial aid, you must meet certain qualifications to be considered for it. First, you must be enrolled in college and taking at least six credit hours. This is the minimum workload you need to apply for all types of financial aid, including work study.

A second requirement is that you demonstrate genuine financial need. To prove this, you'll have to submit information showing your annual taxable income and tax liability from the previous year, as well as your current income amounts and number of dependents. If you live with your parents and can be claimed as a dependent on your parents' taxes, then your eligibility will depend on their income tax information.

The final requirement to be considered for work study is that you must complete a Free Application for Federal Student Aid (FAFSA) by the annual deadline. You must indicate your interest in the work study program by checking the appropriate box on the FAFSA.

How Work Study Operates

If you are offered a work study position, you essentially receive a part time job right on the campus grounds. For example, you may be able to choose from an assignment in the campus bookstore, library, or student records department. Work study recipients can only work up to the number of hours it takes to use their financial aid award.

How Work Study Income Affects Your Taxes

The income you receive from your work study job is considered taxable according to the IRS. This means that you'll have to include it in your total earned income for the year and you'll have to pay tax on it. When you are initially hired for the job, you'll be asked to complete a Form W-4 to indicate how much income tax you would like to have withheld from your pay. If you calculate your withholding allowances carefully, you can ensure that enough tax will be withheld to keep you from having to pay more taxes after the tax deadline.

Work study can be a useful way for students to earn additional money during their time in college. If you qualify for work study and receive income, be sure to report your earnings as part of your income to maintain compliance with the IRS regulations.