By Katherine Sheets, Executive Editor
You stare at the envelope in your hand. Your palms begin to sweat. It’s the time of the year you dread, when numbers and boxes and blanks blur in front of your eyes and you panic that one wrong digit will send you to jail. Your W-2 is here, and you have to file taxes.
If this is you, you’re not alone. Filing taxes is intimidating and with good reason. According to Business Insider, not paying taxes can result in accumulating late fees, forfeiting your refund or receiving a strike against your credit report.
The Internal Revenue Service (IRS) says as long as you make less than $66,000 a year, you can file online with tax-preparation-and-filing software for free. The most common sites are H&R Block and TurboTax, although the IRS does offer its own software option.
However, filing income taxes isn’t that difficult. All you need to do is keep your paperwork straight and be wary of changing tax laws, especially if you attend school out-of-state. It’s important to file taxes for whichever state your W-2 pertains to, as well as make sure you cover both federal and state income taxes. In general, college students will usually have a 1098-T form and, if they work at least one traditional part-time job, a W-2 form as well.
The 1098-T form, which will be filed by parents claiming a student as a dependent, is mailed out by “eligible educational institutions” for “each student they enroll and for whom a reportable transaction is made,” according to the IRS. Colleges and universities report on students’ individual tuition costs, grants and scholarships on the 1098-T form, and those claiming the student as a dependent receive the educational tax credits.
Why do parents, not the student, file the form? If you are an unmarried college student under the age of 24 without your own children and your parents support equal or more than half of your income, you are considered their dependent. The IRS says your parents can claim you and reap the benefits of still having to pay for your laundry detergent and meals when you come home on the weekends.
You may be thinking, “What benefits?” Here’s the real reason people get excited about tax season: credits and refunds. According to Alesha Graves, assistant professor of accounting at Asbury University, “A tax refund is the difference between the amount of tax due on the income tax return and the amount of tax paid by the individual during the year.” After filing your taxes, you’ll receive the difference in a check from the IRS.
“A tax credit is a deduction a person may use to calculate the amount of tax due when preparing their tax return,” according to Graves. Business Insider reported various credits and deductions college students should know about, including the American Opportunity Tax Credit in which “students are eligible to claim a credit of up to $2,500 for the first four years of post-secondary education for tuition and fees, course-related books, supplies and equipment.” However, Graves said, “It is not typical for a student to have a tax credit on his or her tax return.”
Filing your W-2 online is where you come in. H&R Block and TurboTax walk you step-by-step through the process once on their websites. The W-2 form you receive has multiple copies of the same document; you only need to reference one for filing since the numbers are the same. Instructions for the form can be found on the back of copies “B” and “C,” but the websites guide you one box at a time. Don’t get intimidated by tax jargon or the abundance of acronyms on the sites. If you can read and use a keyboard, you can file your taxes online.
The front of the W-2 form has different boxes with specific numbers and letters indicating the field that will be asked for on the filing sites. Before beginning the online process, take the time to review your form and get familiar with where things are located, such as your employer ID number (box b) or state income tax (box 17). Don’t panic if not every box has a number within. Not all boxes apply to every person. In general, if a box is blank, it is information that will not be required of you.
However, sometimes the online program will not let you continue to the next step without addressing a box that may be blank on your form. Hayley Sebree, a junior at Asbury, had this problem while filing her 2018 taxes through H&R Block, as her W-2 form had no employer state ID number listed.
Sebree’s situation was a bit unique; she worked in Kentucky for an employer based out of Indiana. “But I’m not sure if that’s the reason the info was missing or not,” said Sebree. After purposely entering a wrong number, “a box popped up and told me it was incorrect and that if I didn’t know the number or couldn’t find it, to enter 999999.” Her problem solved, Sebree finished her online filing without issue.
Along with pop-up boxes to help users throughout the process, most tax software has tax specialists ready to address any questions you may have through live messaging as well.
The most important thing for you to remember is that it’s better to file your taxes sooner than later. April 15 is the annual deadline for the only thing certain besides death, so since your taxes don’t require an expensive accountant in order to file, go ahead and do it now before you forget.
