Many people filing their taxes for the first time this season are college students or recent college graduates. Here are a few tips to help you tackle your first tax season on your own.
1. Call Your Parents
Even if you have gone away for school or graduated in the past year, your parents may still be able to claim you as a legal dependent for tax purposes. If they paid more than half your living expenses for the tax year, they are probably planning on claiming you as a dependent. Give them a call and find out.
2. Organize Your Documents
Take the time to make sure you have all your tax documents before you start the filing process. A few common documents for college students and graduates include:
- W-2 Forms – A W-2 is a record of wages earned and taxes withheld. You should receive one from every employer.
- 1098-T Form – This is a statement of any tuition payments made throughout the year.
- 1098-E Forms – These forms from student loan lenders are a record of any interest paid on student loans. If you are surprised at how much interest you paid, you may want to consider refinancing or consolidating your student loans to get a lower rate.
3. Take Advantage of Free Tax Preparation and Filing
The Volunteer Income Tax Assistance (VITA) program offers free tax preparation for people who earn less than $53,000 year. You can go online to find a local VITA site. Or take advantage of the federal government’s FreeFile program and file your taxes from your dorm room. If your income is less than $60,000/year you are eligible to file your federal taxes online for free.
4. Be Aware That You Might Have to File Taxes in Two States
If you’re one of the many students who chose a college outside your home state, you may need to file taxes in two states. For example, a resident of New Jersey attending college and working in Ohio will need to file state taxes for both New Jersey and Ohio.
5. Take Advantage of Applicable Education Deductions and Credits
There are tax deductions and credits available specifically to help cover the cost of college. Look into them and see if you qualify. Be aware that your dependency status may affect your eligibility.
Filing your own taxes is just one step on the journey to take control of your personal finances. Tax season is a good time to review how you managed your money over the past year and assess ways to improve. If you have student loan debt, you may be able consolidate student loans into one payment or refinance student loans with a local credit union or community bank to get a lower interest rate.