Taxes. For a word with only five letters, it sure can be intimidating. Let’s take a step back and simplify things.
- Be sure to file your taxes with the appropriate forms for your situation.
- Depending on your situation, you might save more by taking out the standard deduction or itemizing your deductions.
- Consult with a tax professional for assistance in this process. If you're a BYU student, you can get free tax help by working with the Volunteer Income Tax Assistance program (VITA).
Taxes. For a word with only five letters, it sure can be intimidating. Filing taxes is an unfamiliar procedure for many college students. Deductibles? Itemization? 1040?
Let’s take a step back and simplify things.
First, why do you have to pay taxes? Taxes are used to support the government and all its expenditures that ultimately go back to benefit the nation’s citizens. For example, road construction, national security and public schools are all funded by taxes. The Internal Revenue Service is the national agency that handles taxes.
Second, not everyone has to file income taxes. The Federal Government has established a filing minimum; meaning, if you currently make less than a certain amount each year, you are not required to file. However, the IRS recommends everyone file because they might still get a tax return. You can find out what the minimums are by clicking here.
Throughout the year, a portion of your paychecks is taken out for taxes. You then file, or reconcile, your taxes by April 15th of the next year to see if you get a refund or if you have to pay more. You don’t know if you will get a refund or if you will have a due balance until you file your taxes. But how does this work? At your place of employment you are asked to fill out a form that states your exemptions, or allowances, for the year. If you ever need to adjust your exemptions, this can be resolved by speaking with your employer or with the payroll office at your work. Exemptions determine the amount your employer will take from your paychecks and put toward taxes throughout the year. So, if your exemptions are too high, you may have a balance due come tax season. Conversely, if you don't have enough exemptions, you may get a tax return. You can use the IRS’s withholdings calculator to get a ballpark figure of what your exemptions should be.
To complete your taxes, you need a number of forms.
- You may receive a W-2 and/or W-4 from each of the employers you had throughout the year. W-2’s highlight your wage and tax history for the year, and W-4’s detail your exemptions.
- You will also need a 1040EZ, 1040A or 1040 form that you can print off from the IRS website. This is the form you fill out and send to the IRS. The webpage also provides a brief explanation of who uses each of the three forms. Most single students use a 1040EZ.
- A 1098-T form is for students and contains information about tuition. Your college/university will provide you with this form.
You must then consider deductions. Deductions, or tax write offs, reduce how much money you are taxed on. Filers can choose to take a standard deduction or itemize their deductions. When you pick the standard deduction, you choose to deduct an amount pre-determined by the government. When you choose to itemize, you write off many individual things. The IRS provides information for those determining whether they should itemize their deductions or opt for a standard deduction, but you should check with a tax professional as you go about determining your deductions.
Although tax filing becomes more complicated when people start considering their deductions, there are a number of helps to simplify the process.
Many online tax services are available through which you can file, some are even free. TurboTax and TaxACT are some of the better known services out there. The IRS also offers a free service. These services take your information and ask you a variety of questions about things you can have written off, helping increase the size of your return if possible. Online tax filing services can generally take care of both your Federal and State taxes, and they are usually up-to-date with the ever-changing tax codes.
Another option is to work with a local accountant. Just be sure to have all the necessary documents when you meet.
In addition, Volunteer Income Tax Assistance is a program that partners with the IRS to help people file their taxes. In order to qualify for the service, a person must makes less than $51,000 a year, making VITA a good fit for college students. VITA operates with the help of dozens of trained volunteers in the local community. The nearest VITA is located in the Tanner Building here on campus but is also available in other locations throughout the country.
Filing your own taxes can be a bit overwhelming the first few times. So as you begin a habit of filing your own taxes each spring, don’t go at it alone. Getting some help along the way can help you correctly file and likely increase the size of your return. Happy filing!