There are 21 different institutions of higher learning within a mere 50 miles of Ogden, Utah. Many of the students attending Weber State University, Stevens Henager College, Broadview University Layton, and other schools will be filing their own taxes for the first time in their young lives.
If you’re among one of those first-time tax filers, don’t panic: We’re here to help. These tips can help you glide through the tax-filing process with ease.
Understand Your Tax Status And Obligation
If you’re a student who still lives at home when you aren’t at school, the odds are high that you’re still listed as a dependent on your parents’ tax return.
Before you can file your own taxes, make a quick call to Mom or Dad and find out if they’re claiming you as a dependent. If so, you need to note that fact on your own tax returns because it affects your tax liability. You can’t claim any tax exemptions for yourself when you’re considered someone else’s dependent.
The good news for dependents is that they aren’t even obligated to file a return if they earned wages of less than 12,000 or self-employment of less than $400 in 2018. That being said, it’s always best to file a tax return if income taxes were withheld from your paychecks. The odds are high that you’re still due a return — and you don’t want to let the IRS keep your money!
Gather All Your Paperwork Before You Start
Filing your taxes will go massively easier if you gather everything you need in one spot before you start. You should have received W-2 forms from each employer you had during the previous year and 1099s from any company that you worked for as an independent contractor if they paid you more than $600. All of these should have been mailed to you no later than Jan. 31, 2019. If you didn’t receive something, you need to contact that employer and request a duplicate before you can file.
It’s a wise idea to gather all of your tax forms for the year in a folder that you can keep for the future. While your taxes may be fairly simple right now, that could change in the future. Good tax habits that you create now can serve you well down the road.
Know The Difference Between Deductions And Credits
Deductions and credits are two of the most important things you need to understand about taxes — and many people confuse one for the other. A deduction reduces the amount of income on which you have to pay taxes. A credit, on the other hand, reduces your actual tax bill. That’s a big difference.
For example, imagine that you have $1,500 in taxable income. A $1000 tax deduction for your student loans allows you to reduce the amount of taxable income you have to just $500. On the other hand, imagine that you owe $150 in actual taxes. A $1000 education tax credit would reduce your taxes to $0. In addition, while deductions can take your taxable income down to nothing, credits can sometimes get you a refund that’s more than what your employer withheld!
Don’t Fall For Expensive Gimmicks
Finally, don’t be in a hurry to get your refund. There are a lot of places that will allow you to take an advance against your refund in exchange for a fee — but that fee is often quite high. Plus, the “advance” usually only reaches you once your refund has been approved by the IRS. That means it will get to you just a few days faster than your refund would ordinarily be deposited in your account anyhow. It’s not worth it.
You can file your taxes yourself online with far less expense and a minimum of hassle. Modern e-file systems make taxes easy for many filers.
Still Looking For Help?
Facing your tax returns when you’ve never handled the job before can be daunting — but we know you can do it. At McKay Tax & Accounting, we offer free filing services directly from our website that may be applicable to your needs. In addition, our friendly, family-owned company is here to assist entrepreneurs, independent contractors and self-employed business owners of all sizes with their personal and corporate taxes.