Cure for TaxPhobia: Tips for filing taxes

The beginning of a new year is always hectic for anyone who has had a job the previous year.

Finding paperwork in the mail, organizing your documents and then filing taxes can seem like the most complicated thing.

Emily Brandenstein, sophomore, has never been taught to file taxes and thinks that she would be better off seeking the help of a tax professional.

“It was scary to me that the government just took a chunk of my paycheck every two weeks, but I know that there are some tax geniuses out there who could help me,” Brandenstein said.

The first thing that first-time filers should know is that the process is not hard, but it takes patience and care to make sure you’re doing the right thing and following instructions.

A good starting point is to determine whether or not you actually need to file taxes. A person owes money to the government for every dollar that they receive. In charge of all of this money is the infamous Internal Revenue Service (IRS).

According to the IRS website, “you must file a federal income tax return if you owe tax.” Basically everyone owes the government a portion of their income. This tax is usually taken out of every single paycheck, usually in several different forms.

The amount of tax you have paid is not calculated until the year is up, so you have to file taxes in order to see if you have overpaid or underpaid your required taxes. If you have overpaid, you get a refund. If you have underpaid, you owe the IRS money by April 15.

According to Laura Johns, a CPA with H&R Block, a good indicator that you need to file tax returns is getting documents in the mail that say “Important Tax Documents Enclosed.”

“(Receiving important tax documents in the mail) doesn’t necessarily mean you need to file a tax return, but it does mean you need to find out. The rest depends on if the student is being claimed on their parents’ returns and how much the student earned,” Johns said.

Before you can start filing your taxes, there is a bit of information you have to gather. Find out if your parents have claimed you as a dependent, whether they’ve claimed the American Opportunity Credit for students before, who is paying your loans, if you have any scholarships and any other pertinent questions regarding your financial status.

The next step in filing tax returns may be to use a filing software or to go and see a tax professional in person. According to Johns, a tax professional will prepare the necessary forms for you and tell you what you’re doing as you do it. Often, they will file everything for you electronically, and you then get your refund within 8-21 days.

There are three different forms that a person can fill out depending on which one is necessary. The shortest form is the 1040EZ; the medium length form is the 1040A; and then finally, the longest one is the 1040.

When you talk to a tax professional or put your information into a software program, it will tell you which form you need. Students are entitled to a lot of benefits they don’t know about. The American Opportunity Tax Credit is available for students in their undergraduate programs, and has a maximum annual credit of $2,500 per student which many students are unknowingly eligible for.

Even graduate students have opportunities for large savings on their taxes. A Tuition and Fees Deduction, Lifetime Learning Credit and interest on loans can all save students money if prepared correctly.

According to the DePaul Financial Fitness Program, you can only claim one of these credits per year and guardians would take the credit if they claim you on their taxes.

“I want to caution people to make sure they’re confident in their eligibility for the benefits they receive. I don’t want them paying anything else,” Johns said. “You also don’t want to get a refund, spend it and then realize you weren’t entitled to it and have to give it back.”

Another important note is that, even if the IRS says that you are not required to fill out taxes, it might still be beneficial to do so. Just because you do not have to fill out taxes does not mean that you are not eligible for a tax refund: You might still get money back.

“The IRS only likes to tell you when you owe them money, but they don’t like to talk very loudly when they can give you money back,” Johns said.