Many college students on campuses across the United States can be counted on to be familiar with one word: procrastination. When it comes to papers and studying for tests, that word is used quite frequently. Some say it applies positive pressure to get the activity completed. Others say they hate being pressed for time. No matter what side of the fence individual college students stand on, procrastination is not the word to use when it comes to this date: April 15.
Annually, April 15 can be dubbed the Internal Revenue Service Day. After all, if a tax return or extension is not postmarked by midnight of this date, then serious repercussions from the IRS could occur.
All individuals are not required to file tax returns; however, the IRS has found that more than 70 percent of those who file are due a refund, so it may be an advantage to file. According to IRS.gov, the law requires students whose unearned income is above $750 or whose earned income is above $4,750 to file a tax return.
Unearned income includes taxable interest, dividends, capital gains and trust distributions of interest, dividends, capital gains and survivor annuities. Earned income includes wages, tips and taxable scholarship and fellowship grants.
Once the need to file a tax return is established, it is important to decide who will be completing the tax return paperwork.
Individuals may opt to complete the paperwork themselves or have a professional prepare it. Software is available for those who need help. If individuals decide to ask a tax agency for help, they are eliminating the likeliness of errors. They will also incur a fee for the service, although remedies exist for this.
“We have done two seminars on campus for students who need help with their taxes,” Sharyl Toloday, a marketing director at Liberty Tax Service, said. “If they choose to seek further help, tax services can be discounted for first-time and returning customers.”
A big concern for college students is to know if they are claimed as a dependent by their parents on tax returns, Toloday said. If an individual is under 24 and a college student, his or her parents can claim the student on their returns. Toloday said that this could be confusing for those dependents as they cannot claim education credits but the dependent student’s parents can claim them.
Education credits include the Hope Scholarship Credit and the Lifetime Learning Credit. According to IRS.gov, the Hope credit applies only for the first two years of post-secondary education, and it can be worth up to $1,500 per eligible student, per year. Of the first $1,000 of tuition and related fees paid during the tax year, 100 percent can be credited. 50 percent of the next $1,000 can be credited as well. To qualify, the student must be enrolled at least half time.
The Lifetime Learning Credit applies to undergraduate, graduate and professional degree courses, according to IRS.gov. If qualified, the credit can equal 20 percent of the first $10,000 of post-secondary tuition and fees paid during the year for all eligible students. A maximum credit of $2,000 per return is set, and the student must realize that he or she is not eligible to claim both types of education credits within the same year.
Along with these credits, certain taxes may be deducted from a federal income tax return, according to the IRS.gov. Three types of deductible non-business taxes exist: state, local and foreign income tax, real estate tax and personal property tax.
With information of credits and deductions, the individual can choose to file electronically or to send the return via postal mail. IRS e-file programs offer quick, easy and accurate alternatives to filing traditional paper returns, according to IRS.gov. Electronic options include computer filing through a tax professional, filing from a personal computer or TeleFiling using a touchtone phone, according to the Web site. Last year alone, 53 million taxpayers filed electronically and more are expected to do so this year due to the faster method of filing and refunding, according to IRS.gov.
“I used the TeleFiling option last year for my taxes, and my information was processed so quickly,” Owen Lee, a USF student, said. “I had my refund in less than a week.”
Mailing the return always works. The address can be found on the tax instruction booklet, depending on where the individual lives. If mailing, the IRS offers these tips: Be sure to sign and date the return; include a daytime phone number; assemble any schedules and forms behind the tax return in order of the “Attachment Sequence No.,” which can be found in the upper right-hand corner of the return; use the included coded envelope — if possible — and don’t forget the stamp; and if a payment is included, write the name, address, social security number, daytime telephone number and form number on the payment. Make the check payable to the U.S. Treasury.
Toloday encourages double-checking the filing status and ensuring that all proper data and W-2 forms are included. A simple mistake can cause problems that lead to delays in processing the return and receiving a refund.
“It is important for students to include any bank accounts that earn interest and any purchases and sales from stocks (or) day trading in the tax return,” Toloday said. “It is never a good thing to exclude that kind of information.”
It is now possible to check the status of a refund. “Where’s My Refund?” is an Internet-based service that meets the IRS security and privacy certifications, according to IRS.gov. The Web site also mentions the IRS TeleTax System that can be accessed at least four weeks after filing. The system is toll-free and can be reached at 1-800-829-4477. To access these services, an individual needs a social security number, their filing status and the whole dollar amount of the refund, according to IRS.gov.
If procrastination has gotten the best of a college student, one can file for a four-month extension using Form 4868. This form can be found at IRS.gov and filed through paperwork, phone or computer. The extension only extends the paperwork, not the payment due (if applicable), according to IRS.gov. And for those who cannot pay the tax payment in full, an installment payment plan is available if qualified. According to the Web site, if the payment is not more than $25,000, the entire balance can be divided into a five-year plan that includes a fee and interest.
For a working college student, filing a tax return can be beneficial and educational. After all, procrastination could be keeping students from some much-needed relief of the end-of-the-semester budget squeeze.