April can mean many wonderful things. Spring is in full-bloom, the semester is winding down, Cadbury creme eggs are found at every supermarket. But April is also synonymous with something else: tax season. As an attempt to help answer some of your basic questions, we asked Park University’s own Marsha Shapiro to shed some light on the situation:
Can you start by telling me what you do at Park? What classes do you teach?
I am a Lecturer of Accounting. I teach various Accounting courses, including Financial Accounting, Tax and Auditing.
What are taxes and do I (the student) have to file them?
Income taxes are what you have to pay on the income you have received during the year. Students are not automatically “exempt” from filing taxes.
There is not a one-size-fits-all answer regarding if you have to file. There are several factors to consider. In general, if you make more than the standard deduction and personal exemption combined ($6,300 plus $4,050 for single filer 2016) then you are required to file. So if you make more than $10,350 in 2016 (and you are single) you must file a return. There are other limits for married filers. There are also special rules if you can be claimed as a dependent of someone else – for example, your parents.
Regardless if you are required to file or not, it may be beneficial for you to file. For example, if they have withheld Federal and/or state taxes from your paycheck, you may want to file to get that money back.
How do I file taxes? Do I have to have someone do it for me? How much does it cost?
You file taxes by filling out the required forms. You can have someone prepare taxes for you. Depending on your income there are free services available through the VITA program. You can also take your tax information to various tax preparers. The cost varies widely.
What kind of paperwork do I need in order to file?
You can obtain form 1040 from the IRS website (www.irs.gov). You will also need to file state tax returns for your state of residency and any states where you have worked. Those forms would be available on the various state websites.
There is an issue anymore with filing paper returns. The IRS (and most states) do still accept paper returns, but many forms are hard to get because they must be generated from tax software in order to be accepted. The best way to go is to e-file. There are several free e-file software packages available online.
Will I owe money?
That is difficult to answer since everyone’s situation is different.
What if I’ve had different jobs throughout the year?
You should receive a W-2 (or 1099) form for every job that you had during the year. There is no minimum amount needed in order to receive a W-2. If you worked as an independent contractor during the year you should receive a 1099-Misc form. However, you will probably not receive this form if you earned under $600. However, you should still report any income, whether you receive the form or not.
What if I haven’t worked at all this year?
Income tax filing is required if you have income. Therefore, if you have not worked during the year, then you do not have income from wages to report. However, it is still possible that you might have income from other sources…like interest or dividends from investments (if you are lucky enough to have those!)
How often do I have to file them?
Taxes are filed annually. They are due on April 15th, however, this year is a special situation. Since April 15th falls on a Saturday, then the taxes would be due on Monday, April 17th. However, since there is a Washington D.C. holiday on Monday, then the Taxes for this year are not due until April 18th! So you have a little extra time this year.
If you feel you cannot get your taxes done by the due date, then you may file an extension. This is done by filing form 4868 Extension of time to file. This gives you an automatic six months to get your forms and other information together. One note, however, is that this gives you only an extension to file….not an extension of time to pay. So, if you think you are going to owe money, you need to pay what you think you will owe when you send in your extension.
Anything else you think is important for beginners to understand?
I usually recommend that people get some professional assistance in filing their taxes for the first time. It could possible cost some, but it can take the stress out of the process, which can be a bit intimidating.
Editor note: Turbo Tax is a common at-home filing service, the basic features are free and the premium features have a fee. H&R Block is one of the leading tax preparation companies which provides one-on-one services for a fee.