Although tax time causes a number of headaches, stress and frustration for people, there are ways to make the process a little easier.
If you’re like many students you may be unaware of how to file taxes, or let’s face it, what they even are. The Financial Counseling Clinic at Iowa State and financial counselors Doug Borkowski and Jeanna Hennick have information to help you get the most from this joyous tax season.
With a new year come changes. The biggest change is the date on which tax filing needs to be completed. April 18 is the magical day this year, instead of April 15.
Before April 18 rolls around, make sure you know if you need to even file a tax return.
Basically, if you made money this last year, the government took some of it through taxes. Filing a tax return determines whether you overpaid or underpaid on those taxes.
If you underpaid, unfortunately you owe some money. If you overpaid, you’re about to get some extra spending money back in your pocket.
So, if you made money last year, you need to file taxes. If you still aren’t quite sure if you should file a tax return, visit the IRS website, answer the questions and the IRS will tell you whether you should file one or not.
If you’re one of the lucky ones who gets to file taxes, you have some options: doing it electronically or by mail, or hiring a tax preparer versus flying solo.
If you do it by mail, getting a refund may take longer compared to electronically filing, but if you do end up filing manually, you can get the necessary forms at www.irs.gov; some local libraries and post offices; or at any IRS office.
Using a tax preparer does come with many advantages, but make sure you ask questions such as experience, credentials, training, as well as their methods and services offered that will allow you to get the most out of your return.
Asking questions will also prevent you from being suckered into common rip-offs that occur with tax preparers. The most important thing to consider when choosing a professional is to find someone that you trust, and someone who meets your personal needs.
If you want to file taxes yourself, there are many software programs that can help the process. To find a list of certified tax preparers, log onto www.aicpa.org.
If you’re up for the challenge of doing it yourself, take advantage of the free filing software available at www.irs.gov. However, if you made more than $58,000 in the last year, buying software such as TurboTax or H&R Block at Home is necessary.
No matter what method you chose, filing taxes doesn’t have to be a complicated process. Take advantage of the many resources that are available to assure that you get the most out of your tax return.
When filing taxes, you first need to determine your status. And no, the government doesn’t operate like Facebook and they really don’t care if you’re complicated, engaged or in a committed “bromance.” What they do care about though is if you’re single, married, have a dependent or are widowed. Use the following information to determine your personal status.
• Single (applies to most college students) — File as a single if you’re unmarried, or have been divorced by the end of 2010.
• Married filing jointly — If you are married and wish to file jointly use this status. Filing jointly gives you more tax benefits than filing separately. In order to qualify you need to have been legally married by the last day of 2010.
• Married filing separately — If you are married but wish to file separately, use this status when filing. Filing separately doesn’t give couples the advantage of filing jointly, but there are some circumstances that require a couple to file separately.
• Head of Household — Use this status if you are unmarried but can claim a dependent or have been caring for a dependent for more than 6 months of the year.
• Widow/widower with dependent — This status is used if your spouse has died within the past two years, you haven’t remarried and you can claim a dependent.
If you are still confused, concerned with, or have more detailed questions about filing taxes or taxes in general, there are many services available to help.
www.irs.gov is a great resource because there is a section on the website dedicated with helping individuals through the process and answer common questions. Tax preparers and other certified specialists or computer software are trained and designed to help people get the most from their tax returns and make the process less painful. Although space is limited, Financial Counseling Services can assist current students, just be sure to make an appointment.