Expert Advice: 8 Tips for Students Filing Taxes for the First Time
Published on 28 Mar 2014 | Updated on 17 Dec 2014
We’ve all grown up hearing our parents and the media complain about the headaches of tax season, a topic that most kids are quick to ignore. But for many working college students on the brink of adulthood, the time to start filing taxes is sooner than they think—now.
Mastering the art of tax filing can be daunting to the uninitiated. To help navigate yet another challenging transition into the real world, NerdScholar asked university experts to share some advice to make things easier for college students filing their first tax returns.
1. Always file if your paychecks have had taxes withheld.
It is absolutely crucial to know when to file your taxes and what information will help you to do so. As John Twombly, an accounting and finance professor at the Illinois Institute of Technology, advises, the law states that a dependent student who earned an income less than $6,100 in the tax year does not have to pay taxes. Anyone making over this amount by law must file. But, “if a student doesn’t have to file a tax return, not filing would still be a mistake if any income taxes were withheld on paychecks,” Twombly says. “That would be tantamount to giving the IRS a donation!” So even if you’re not legally required to file a return, you’ll want to do so because the government may owe you money.
An important first step in filing taxes is obtaining your W-2 form, which is your proof of employment at a company or organization. If you held multiple jobs over the past year, make sure to obtain your W-2 from each of your employers. The company you worked for will typically send you the form by January 31 st. but contact them if you do not receive it by then.
2. You cannot claim tax exemptions if you are a dependent.
Knowing your status as a dependent on your parents’ tax returns is vital to understanding the basics of tax filing. In fact, not knowing is one of the worst mistakes a student can make, Arthur Agulnek, an accounting professor at the University of Texas at Dallas, says. According to the Internal Revenue Service (IRS), a dependent must be either a “qualifying child” or a “qualifying relative” who meets certain conditions, such as
age requirements, income, or full-time student status. Dependents cannot claim any exemptions when filing their own taxes, even if their parents do not claim them either. Since most college-age students fall into the dependent category, students cannot claim their own exemption.
3. Take advantage of free tax assistance at your college.
A major hindrance to students is their unfamiliarity with the tax process. “If a student finds the irs.gov website, it can be very difficult to navigate and to understand,” Twombly says. “Many universities have self-help student groups and often professors will give guidance to their students” on the process. In particular, many universities participate in the nationwide Volunteer Income Tax Assistance (VITA) program. This is a great free service that students can use for any tax guidance, both on campus and in their community. Taking advantage of the many support avenues can jump start tax preparation and mean wonders for future tax seasons.
4. Start preparing early.
The deadline to file a tax return is April 15 th. but it is important to begin the process well in advance. Starting early will give you time to gather the right tax documents and seek advice from your parents and tax professionals, Twombly says. “Don’t just file on your own,” he adds, especially if you are still learning the process.
5. Don’t pay to file taxes.
College students, like everyone, are eligible to use the IRS tax filing software at no cost—assuming your annual household income is less than $58,000.
6. Do not overlook deductions for your education.
If you’re going to school—and paying for it—you can opt for certain deductions when filing your tax return. “Be sure to look into education tax credits and the earned income tax credit,” says Agulnek. “New taxpayers,” he says, “should make sure they do not leave money on the table by overlooking tax deductions.” A deduction reduces the amount of tax taken out of your paychecks, and education deductions can save you as much as $4,000.
7. Beware of scams.
“Students should be aware of the growing problems of identity theft as many filers have discovered that identity thieves had beaten them to their refunds,” Agulnek says. To best avoid any potential scams, he advises students to file their taxes electronically using the official IRS website.
8. Don’t forget to sign and date your return.Source: www.nerdwallet.com