Part of being an adult involves filing and paying your income tax. Tax rates for college students tend to be low because their income tends to be low. Your federal tax refund may be large or small depending on income, withholding and filing status.
Income tax e-filing is the safest way to file your tax return. Payment of income tax, if you end up owing, is another matter. Still, there are ways to take the stress out of tax time.
1. Tax filing requirements
Do you have to file a tax return? Depends on your income, age, tax status, and whether you are being claimed as a dependent on some else’ tax return.
Common reasons to file a tax return:
- Your income is high enough to require filing
- Your income is too low to require you to file, but you want to get a refund of taxes withheld
- You’re being claimed as a dependent by someone else and your total income meets minimum requirements to file as a dependent
- You bought health insurance from the Marketplace and you want to claim the refundable Premium Tax Credit
- You had income from unemployment
2. Paperwork you will need
At the end of January, the W-2s and 1099s get sent out to taxpayers. These information forms tell you how much income you generated, the kind of income, and the source of the income. If your total income is low enough, you may not need to file a tax return at all. But you might want to anyway so that you can get a refund of any income taxes that were withheld from your pay.
- W2: a statement of wages earned as an employee, includes state and federal income tax withheld, Social Security and Medicare taxes withheld, other state and local tax, deductions for other programs such as retirement plans.
- 1099 MISC: a statement of money paid to an independent contractor, no withholding of any kind is taken from these payments. Other types of 1099s apply to: interest INT, dividends DIV, and unemployment G
If you get a W2, you report that income as wages on your tax return. If you received a 1099 MISC, you are considered self-employed by the IRS and you must file a long form 1040 form with a Schedule C reporting your income and expenses. You also have to file a Schedule SE where you calculate self-employment tax on your net self-employment income at a rate of 15.3 percent. Self-employment tax is a combination of Social Security and Medicare taxes.
Other paperwork that college students need for their tax return is the form 1098T which will be sent by your school. This form lists the total amount you paid last year for qualified tuition and related expenses after any reimbursements or refunds, scholarships, and grants received during the year.
Use the information on the 1098T to calculate certain education tax credits which you might qualify for and also as a possible reduction in your overall taxable income.
3. Where to get help
Right about now you might be getting a headache. I understand. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $54,000 or less, persons with disabilities, and limited English speaking taxpayers who need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals.
To locate the nearest VITA site near you, use the VITA Locator Tool or call 800-906-9887. Many of these sites are operated by the AARP Foundation’s Tax Aide program. To locate the nearest AARP Tax-Aide site between January and April, use the AARP Site Locator Tool or call 888-227-7669.