Thursday, March 3, 2011
TAX RETURN TIME: FIVE TIPS TO MAKE FILING EASIER FOR COLLEGE STUDENTS
MANHATTAN -- Filing a tax return may be the last thing on the minds of college students already swamped with schoolwork. But a Kansas State University expert says the tax preparation process doesn't have to be an overwhelming task.
Amy Hageman is an assistant professor of accounting at K-State. Her areas of research include antecedents and consequences of tax policy, and judgment and decision-making by taxpayers and tax professionals.
Hageman says the following five tips can make preparing and filing a tax return easier for college students:
* First, check with your parents about whether they're claiming you as a dependent on their tax returns. Full-time college students under age 24 who don't provide the majority of their own support may be claimed as a dependent by their parents or another relative. Students claimed as a dependent on another taxpayer's tax return are allowed a smaller standard deduction and aren't able to claim a personal exemption on their own tax returns.
* Second, students not claimed as a dependent on a return and who pay for qualified educational expenses may be eligible for certain educational tax credits. The American Opportunity Credit has a maximum value of $2,500, based on 100 percent of the first $2,000 of qualified postsecondary educational expenses and 25 percent of the next $2,000 in qualified expenses. The credit can be applied to the first four years of postsecondary education. The Lifetime Learning Credit is available for any year of postsecondary expense and has a maximum value of $2,000, based on 20 percent of qualified expenses up to $10,000.
* Third, get free help from Volunteer Income Tax Assistance, or VITA. It's a free service, available in many communities, that assists taxpayers in preparing their simple federal income tax returns. To locate the nearest VITA site, call 1-800-906-9887. Hageman said students might also consider filing their tax returns through the IRS' Free File. Individual taxpayers are eligible to use Free File tax software if their adjusted gross income is less than $58,000.
* Fourth, remember that scholarships used for room and board -- not tuition -- may be taxable. Scholarships that are used for tuition, fees or required books are generally tax-exempt.
* And finally, be sure to file your return. Even if students had low earnings and are not required to file a tax return, filing a tax return is the only way to receive a refund of any federal income taxes withheld, Hageman said.
Students can find further information at the "Tax Information for Students" section on the Internal Revenue Service website, http://www.irs.gov/individuals/students/index.html.