Everyone remembers his or her “first time” – whether the experience is riding a bicycle, playing an instrument, or going on a date. Sometimes a “first time” can seem a little intimidating or even complicated and cause us stress. Filing taxes is one of those things that can stress us out the first time we do it. But that doesn’t have to happen! All it takes is a little preparation and attention to detail. With our First-Time Taxpayer’s Guide, your first time filing can be easy and stress-free.
When Should I Start Filing a Tax Return?
When and whether you need to file is determined by your filing status, age, and dependency status. Married people filing separately must file if their gross income is more than $4,050. Single people filing who are under age 65 must file if they made $10,400 or more.
As a college student it’s possible you’re currently claimed on your parents’ tax returns as a “dependent,” meaning your parents claim you to obtain a dependent tax exemption on their own tax returns. According to the law, a college student can be claimed as a dependent up to age 24 if they are a full-time student for at least 5 months per year.
Dependents can also be claimed if they’re under age 19 and not in school. (Age restrictions do not apply to disabled people). To qualify, you must also be providing less than half of your own financial support that year, and you must live with the parent claiming you for more than half the year.
I Made Less than $10,400. Why Should I File a Return?
Regardless of whether or not you’re required by law to file, if your employer withholds taxes from your paycheck, you should still file because you may be owed a refund.
How do I File if I am Claimed as a Dependent?
You need to know is whether you are a dependent on your folks’ tax returns. Not knowing is a common mistake – but a big one. Dependents cannot claim ANY exemptions – including their own – when filing their own return.
How do I File if I am Not Claimed as a Dependent?
Before you file, it’s a good idea to see if your university offers any guidance on preparing your tax return, and to learn about education credits you may be eligible for. Many universities take part in the Volunteer Income Tax Assistance (VITA) program. This free service is at your service as a student for tax guidance.
Taking advantage of the various support options available to you can make tax time a LOT less stressful, and can make future filings easier.
Tax education credits, for example, are important as they can mean a bigger tax refund. Are you away at school? If so, you may want to get your tax documents mailed to you at your parents’ address, your “permanent” address – not sent to you at school. And don’t fret – some forms and documents you may need are available online.
What Forms Will I Need to File my Taxes?
It’s important to keep the tax documents and forms you’ll receive and need to file in a safe place.
Setting up an accordion file, for example, can be helpful because you can also store important receipts in there and organize everything by month (we’ll cover more about how self-employed people can file their deductions in later articles). Here are the basic forms needed to file your tax return:
W-2 Form: Your W-2 Form is crucial to filing your first tax return. This form is the legal proof of your employment. If you switch jobs and end up working more for more than one employer per year, it’s important to make sure you’ve got your W-2 from each employer. If you haven’t received your W-2 forms by the end of January, it’s a good idea to contact your employer, as you’ll need to submit these with your tax return.
Form 1098-T: Your college should provide this; it’s your tuition statement. It includes vital info including tuition paid, related expenses, and scholarships or grants you’ve received. You can request this from your school if you don’t receive it. Instructions on how to fill it out are available on the IRS (Internal Revenue Service) website.
Form 8863: This form will enable you to determine whether you qualify for education credits such as the Lifetime Learning Credit. Directions on how to complete this form, and the form itself, are available here.
Form 1098-E: If you have a student loan, you’ll need this form to deduct any interest you paid. You must get this form from your lender if you paid over $600 in interest during the tax year. Visit the IRS website here to learn how to fill out this form and claim your deduction.
Congratulations on your pursuing higher education – consistently linked to higher lifetime earning levels – and on filing your first tax return! And remember, SL Tax Centers is always here to help!