Tax season is underway and there are several factors to consider when filing, especially for those with no prior experience. Certified public accountant Emily Smith said key preparations students should consider as they approach this tax season are to gather W-2s and any other tax documents and look them over for accuracy.
There are many options for filing. A paid professional or online service can ease the workload for students. However, Smith said according to the IRS website individuals with an annual adjusted gross income of $79,000 or less may qualify for free tax filing services through IRS.gov.
The type of income individuals receive also affects filing. For investors, it is important to consider all their sources of income. Several companies pay out profits for those investing “They may have interest or dividends, so be sure to get your tax statements from whatever platform you’re using,” Smith said.
Organization is a key element when preparing taxes. Keeping consistent records alleviates stress during the tax filing process. Smith suggests keeping records for seven years preferably as physical and digital copies.
Smith highlights the importance of consistent records stating “If the IRS ever chooses to audit you, you’ll want as much documentation as possible as you can to support whatever’s on your tax return.”
The pressure of taxes should not be faced alone, specifically for first-timers. Students may have the option of being claimed as dependents on their parents’ tax returns. “Look at the 1040 instructions, and there’s a section labeled dependents, where it asks and walks you through a step-by-step process to deter-mine whether or not you can be claimed as a qualified dependent on a tax return,” Smith said. Key features that determine if a student is a dependent are the relationship to the primary filer and whether the individual provided more than half of their support.
Mistakes when filing taxes can cause more work and lead to unwanted attention from the IRS. Smith said it is important to maintain up-to-date and accurate documentation. To Smith, moving and switching jobs are the most common ways people lose track of their W-2s. It would be wise for individuals to submit accurate and timely information “which means reading the instructions, and if you don’t understand what’s on the forms then it means getting help if you need some,” Smith said.
The information in this story is not meant to be used for tax advice. If you have any questions or concerns it is recommended that you consult a tax professional.
-Emily Smith is the mother of Richland Chronicle Editor-in-Chief Aislyn Smith
