Filing taxes for the first time is a rite of passage that every young adult must face. The United States tax code fills more than 70,000 pages. To say that it is complicated and ever-changing is an understatement. Before you file your first tax return, consider these three tips to surviving the tax season.
Try to File for Free
Before you dish out your hard-earned cash for a tax preparer to complete your tax return, consider free filing options. Many tax preparation software companies offer free file options for simple, low-income tax returns. You can find a list of free file options at the IRS.gov website. While you are at IRS.gov, do a search for Volunteer Tax Assistance (VITA). VITA volunteers are often retired accountants, tax preparers, and IRS employees. They offer their services for free. You should also check with your campus resource center. Many colleges offer free filing options at the campus.
Figure Out Your Allowances
Your tax obligations start long before your taxes are due. When you accept a job from an employer, your employer will require a completed Form W-4, Employee's Withholding Allowance Certificate. The number of allowances depend on your marriage status and how many jobs you have. Page three of the W-4 includes a personal allowances worksheet, which will walk you through determining how many allowances you should claim. You will most likely get money back on your taxes if you report zero or one allowance.
Coordinate Filing with Your Parents
One of the most common errors first time tax filers make is claiming themselves as an allowance when mom and dad have already claimed them. Before you file your return, ask your parents if they are claiming you on their return. Keep in mind, the tax code states that a relative can claim you if:
You are a full-time student under the age of 24.
The relative provided over half of your living expenses.
You lived with them for over half a year or if you lived on campus but your family home is still your primary residence.
If you and your parents both claim you, the IRS may reject your tax return. You will then be forced to file again. Everyone wants a tax return refund. To ensure you receive a refund, or at least do not end up owing the IRS, take precautions to fill out your W-4 correctly. This will ensure you pay in enough in taxes throughout the year. Follow up with an accurate tax return, and your first year as a tax-paying citizen should go smoothly. If you do not feel confident to file your taxes alone, visit the free tax resources in your area for a helping hand.
If you’re still trying to figure everything out, and it feels a bit overwhelming to balance school, work, and any additional responsibilities, let Student Coaching Services help!