What’s worse than taking final exams?You probably didn’t answer "filing taxes." With all the resources available to help (including your parents!) filing tax returns is no big deal. But knowing some basic information can help you streamline the process and ensure you don’t get tangled up waiting for your refund!
Do I have to file a tax return?
That depends, but for most college students (especially if you work) the answer is yes.
Here are some tax-filing tips for smart tax filing:
- Wait to receive all your W-2 forms (if you’ve had several jobs) before filing. Employers are required to send your W-2s by January 31. If you don’t receive yours by February 15, ask the IRS to contact your employer.
- File only one federal tax return, no matter how many jobs or different addresses you’ve had in the past year.
- When you start a new job, take time to complete your Form W-4 (Employee’s Withholding Allowance Certificate). As a dependent student, if you expect to earn less than $5,350 during the entire year, you may be eligible to claim exemption from withholding and no federal income taxes will be deducted from your paycheck.
- If you earn over $20 per month in tips, you have to report that to your employer for proper withholding. Here’s the IRS explainer on reporting tips.
- Be sure to photocopy your tax return before you send it to the IRS! You should always keep a copy for your own records, and you will need it when applying for financial aid.
- If your 2007 Adjusted Gross Income (AGI) is $54,000 or less, you may be eligible for a free tax preparation and electronic filing (e-filing) service called Free File. In 2003, the IRS contracted with a group of commercial tax software companies to prepare and e-file millions of taxpayers’ returns. It’s worth checking out one of the IRS’s free service providers to see if you qualify. Available in English and Spanish, Free File has a quick turnaround on refunds—generally 10 days with direct deposit. Note: Free File may not allow you to file for a Lifetime Learning tax credit or other higher education tax deductions.
Does your campus offer free tax preparation assistance?
On many campuses, the bursar’s office or academic departments sponsor programs where accounting and finance students provide free personal tax preparation for their fellow students. Since these tax-prep programs aren’t always widely advertised, check with your college’s business or financial aid office to see whether this assistance is available on your campus.
Are you or your parents eligible for 2007 education tax benefits?
Tax-law changes in recent years have added and expanded higher-education tax benefits, including tuition and fees deductions, Hope and Lifetime Learning credits, or allowing employer-provided education benefits or paid student loan interest to reduce taxable income.
Before you and your parents prepare individual 2007 income tax returns, find out whether you and/or your folks are eligible for any of these tax breaks or credits with a qualified tax adviser, the IRS on the Web at www.irs.gov, or by calling (800) 829-1040. You may wish to consult IRS Publication 970, Tax Benefits for Education. Other useful IRS links include 2007 Tuition and fees deduction and 2007 Lifetime Learning Credits.
Great reasons for filing your 2007 taxes and 2008 FAFSA early:
Nailing down next year’s funding resources (and snagging any refunds) makes it a whole lot easier to plan ahead and budget wisely. Early filing of both your annual FAFSA and your 2007 taxes may facilitate a more generous financial aid package—particularly if your school has a first-come, first-served system. Also, you may not be eligible for state aid if you wait until April to submit your FAFSA. Check your state’s filing date.
Early tax filing supports your FAFSA and any other financial aid requirements your school may have. For example, your school may require a copy of your completed tax return before you receive federal student aid. And finally, don’t put off filing your FAFSA because your 2007 taxes aren’t ready. The FAFSA allows you to estimate those taxes, then update your application online.
Additional information
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