Dollars and sense

Theresa Montgomery

How to take the worry out of filing tax returns

Only two things are certain, or so goes the saying – and one of them is taxes.

But there’s no need to feel fear about filing your tax return, said Chris Kerns, spokesman for the Internal Revenue Service for the states of Ohio and West Virginia.

“Eighty percent of people in this country who file a tax return get a refund,” Kerns said.

However, separate figures are not available for college students.

WHEN FILING YOUR TAXES DON’T FORGET:

• You can do it! And it will probably take less than an hour.

• The deadline is April 17.

• Financial penalties will be increased if the deadline is missed.

• Simple math errors are the most common mistakes.

• Taxes can be filed manually, electronically or with a tax professional.

• Talk to your parents. It might be more beneficial to file as a dependent.

• The sooner your taxes are done, the sooner you can apply for federal financial aid.

For the U.S. population, the average return was more than $2,100 last year. That means most people are having more money than is necessary withheld for taxes from their paychecks throughout the year, Kerns said.

“In essence, people are loaning money to the federal government,” he said.

That’s not really the best way to go, Kerns said, because as a whole, college students are not awash in cash.

Kerns suggested students have less money withheld, increasing the amount students receive per paycheck. By doing this, they would have more money for their own use throughout the year, rather than waiting for a refund in the spring.

“Set up some savings with that money instead,” he said. “You may want to make that adjustment.”

That’s the optimal scenario if you file your taxes by April 15 – or this year, by April 17. The usual deadline has been extended because tax day falls on a Saturday this year, Kerns said.

Kerns said going to school away from home creates the biggest obstacle for college students in filing their taxes on time.

“First, it’s going to be getting all the documentation together,” he said. “They may not be living in their hometown and are waiting on paperwork.”

Even if that is the case, the IRS will begin incurring financial penalties if the tax deadline is missed, he said.

The most common mistakes people make in filing their returns are simple math errors, and college students are not immune to that, Kerns said.

The best way to ensure accuracy is to file electronically. The electronic return error rate is less than 1 percent, while the error rate for paper returns exceeds 20 percent, he said.

In this regard, Kerns said he sees college students who electronically file their own tax returns as having an advantage over older taxpayers who file for themselves.

“I feel, anecdotally, most students are online-savvy,” he said. “They do not hesitate to download the software needed – and you get your returns much faster that way.”

Kerns cited the second biggest obstacle to making that deadline is the basic fear

students don’t know what they’re doing.

He encourages students to be confident and just do it.

“The best thing to do is go get a cup of coffee and sit down with your computer,” he said. “For most college students, they can do this in under an hour.”

If the coffee and computer still leave you squeamish, there is help to be found in professional tax preparation.

“By far, the vast majority of returns are filed through tax professionals,” Kerns said.

When students come to see Maryellen Hinchman, office manager for H&R Block at University Plaza in Kent, they are not usually first-time tax payers, she said. However, that does not mean they are completely familiar with the process.

“Their mom, dad, or grandma have usually done their tax returns,” Hinchman said.

Normally, if a full-time college student is 24 years old or younger, then his or her parents are still able to claim them as a dependent, she said.

“The two returns are very connected, even with a college student,” Hinchman said.

Sometimes, when Hinchman helps students file electronically, the return gets rejected because someone else has previously claimed the student on their tax returns, she said.

The education credit is much more valuable on the parent’s tax return than a student’s. Students need to be aware of their parents’ ability to claim them, Hinchman said.

“Even if you’re 22, 23 or 24 years old, it’s worth having a discussion ahead of time,” she said.

Unlike the popular image of the last-minute dash to the U.S. Post Office mailbox by midnight on April 15, Hinchman said the peak time at her office in helping with tax preparation comes soon after Jan. 31, when employers are required to mail out W-2 forms.

“We see probably 60 to 65 percent of our clients before Feb. 8,” she said. “That surprises most people.”

Another motivation for many college students to file early is getting their tax information ready for the Free Application for Federal Student Aid.

Anissa Strickland, associate director of financial aid at Kent State, said the earlier a student applies for the FAFSA, the more funds are available.

If someone is still considering the independent coffee-and-computer scenario, the IRS has online resources available to ease your way into the process of preparing your own tax return.

In its fourth year, Free File provides college students a way to file tax returns electronically at no cost, if their annual income is less than $50,000, Kerns said.

The service is available on the IRS Web site at www.irs.gov. Kerns suggested students use the search engine on the IRS site, entering terms such as “college student” to discover pertinent information that may be of help to them.

Contact features correspondent Theresa Montgomery at [email protected]