If you’re a college student or other young person preparing a federal income tax return for the first time, you may not be completely familiar with deductions, tax credits, filing forms and where to get help for free.
But with tax season underway, you’ll need to get up to speed quickly on tax-filing basics.
I remember how anxious I felt when I filed a return for the first time, and it was a simple return. It also brings back memories of my father pouring over a stack of forms and receipts and cranking out numbers on an adding machine the size of a laptop computer.
I procrastinated until the last minute before dropping my return in the mail.
Which brings up my first tip for first-timers: Don’t put off filing until the 11th hour, but don’t rush either because that’s how mistakes are made, with one of the most common being forgetting to sign your return. If you do your taxes online, however, you will be prompted to electronically sign, making life much easier.
You can get more time to file your return by filing IRS Form 4868, but getting an extension does not relieve you from having to pay. The tax experts at NerdWallet.com recommend making a good estimate of what you owe Uncle Sam and send some or all of that amount with your extension request in April.
Here are some other pointers for first-timers that can ease the stress between now and the mid-April deadline.
• Find out about your dependency status. If you’re a college student and your parents are claiming you as a dependent on their return, you aren’t eligible to claim deductions and credits yourself.
According to the Internal Revenue Service, your parents can claim you as a dependent until you are 19. But as a student, that dependency status can be extended until age 24.
Even if you don’t have to file, you might want to do it anyway, especially if you had income tax withheld from your pay. Keep an eye out for year-end tax statements coming in the mail and put them in a handy folder so they won’t get lost or tossed along with the junk mail.
• If you’re a college student and your parents are not claiming you as a dependent, get familiar with the two education tax credits: the American Opportunity tax credit and the Lifetime Learning credit. You can’t claim both.
You can also deduct up to $4,000 of qualified college costs, including tuition and fees. But keep in mind, you can’t claim one of the tax credits along with deducting your tuition and fees. (For more details, go to the IRS website at https://www.irs.gov.)
• Take advantage of free tax preparation services if you run into any tricky issues with your return. Some colleges, for example, arrange for tax experts to offer guidance to students, for free. The Volunteer Income Tax Assistance program (https://irs.treasury.gov/freetaxprep/) offers free help for taxpayers who make $56,000 per year or less, and some tax preparation companies offer free services if you meet their requirements.
Other options: Use online tax software, or the IRS free filing tool if you earned $69,000 or less in the 2019 tax year. You can find it at https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
• If you have a refund coming, it may be tempting to splurge on a 58-inch flat screen or a spring break trip to Florida. A better idea: Apply the money toward college bills or a credit card balance.
This might also be a good time to adjust the amount of money your employer is withholding from each paycheck. If you’re getting a giant refund, you may have had too much withheld during the year, and if you owe the government too much, it may be a sign that too little was withheld from your pay. You can adjust your W-4 any time.