Okay, you got your W-2s in the mail. It’s time to file your taxes! What’s that you say? Tax lingo is Greek to you? It’s okay, many students feel the same way. While it was a test requirement to know the anatomy of a cell in high school, perhaps we should have received an extra course on filing our own taxes! (Along with a Financial Literacy course…but for now, let’s talk taxes.)
Starting with the basics. Who is required to file a tax return? Whether or not you file depends on your filing status, your age, income, dependency status, and other special circumstances. If I’ve already lost you there, this chart easily explains the minimum income requirements to file. The majority of college students fall under the “Single and under 65” category, for which the minimum income is $10,300. If you make less than $10,300, you are not required to file a tax return. Bonus question, students – How do you report that on the FAFSA? The answer – “You worked but were not required to file.”
Now that you know your filing status, what’s the best way to do it? Well if you’re like the typical college student, you want great service for a low price. Here are some options:
Free File through the IRS – Anyone can use free file and e-file their federal tax return at no cost. This is due to a public-private partnership between the IRS and tax preparation software companies called Free File Alliance. You can simply fill out the forms online and e-file. Free e-file is a perfect fit for very simple returns.
For taxpayers whose adjusted gross income is less than $57,000 (married or single), it gets even better. You can use brand name software programs to prepare your taxes for free and then file at no cost with e-file with various companies.
Many online tax software services also offer free federal tax returns, like H&R Block and TurboTax. However, you may have to pay to file your state return.
Best for: Taxpayers with very basic returns or those with adjusted incomes below $57,000.
DIY with Tax Preparation Software – Tax software programs are popular for a reason: they are easy to use. The program walks you through every section of your return and highlights deductions you might be eligible for. Three popular tax software programs are TurboTax, H&R Block, and TaxAct. They range from $10 (Tax Act) to $45 (H&R Block) for the deluxe home version.
For many, the best of both worlds is to do it yourself and also receive guidance from a professional. TurboTax offers a helpline to assist their customers in filling out the forms, and H&R Block software goes a step further by providing tax advice and representation in case of an audit.
Best for: Taxpayers who have common items you’d normally find on a tax return; items such as mortgage interest, charitable deductions, student loan interest, etc. This is also appropriate for “do-it-yourselfers” with basic tax knowledge.
VITA (Volunteer Income Tax Assistance Program through ISU) – Iowa State University accounting students will be offering free tax preparation services from February 15th – April 13th, 2016, located in 1127 Gerdin. Yes, students, it’s on campus, and it’s FREE. Taxpayers with household incomes of $54,000 or less are eligible for basic return preparation services. To clarify, this service is open to all, not just the student population. Free electronic filing (e-filing) of eligible federal and state returns is also available. You can make an appointment or learn more about their service.
Best for: Low income people in the Ames community who are looking for local tax guidance. Also, for ISU grads who would like to reminisce on their college days by being back on campus.
If all of these options still seem too complicated, you can always hire a CPA, and for you non-business folk, that’s a Certified Public Accountant. People who own small businesses, or have complex returns might see this service as expensive, but worth it. CPA’s can help fill in the grey areas and give great advice on which tax strategies to take or not based on the IRS interpretations and past experience.
As we all know, time does tend to fly when we’re having fun, so April 15th will be here before we know it! If you are still unsure how to file your own taxes or need general guidance, please don’t hesitate to reach out to our staff here at the Student Loan Education Office!