Tax Season - What Students Need to Know
Ah. Tax season. That magical time when everyone is usually miserable because they put off doing their taxes till the last possible minute. If you are a student you may not need to worry since your parents may claim you and file your taxes with theirs. But, the unlucky ones, may have to do some prepping and planning of their own. Take heed students and recent graduates: this year take your taxes in early but before you do here is what you need to know.
Before you start gathering your paperwork, check with your parents. They may claim you as a dependent. If your parents claim you as a dependent and you file separately by accident, expect a nice letter the IRS asking that either you or your parents amend the returns.
Students have a few choices when it comes to filing their taxes: tax software such as TurboTax, tax filing agencies like H&R Block, or simply the do-it-yourself approach. When filing students should have ready all W-2 or 1099 (if a contract worker) forms from their employers. You should also have any and all paperwork concerning your loans ready to go.
I recommend that you file your taxes with a professional or if you have software, like TurboTax, use that. Never file your taxes yourself. It leaves you open for large errors and headaches when the IRS comes knocking. The professionals usually have guarantees and will cover your costs if they make a mistake; plus they also know all the rules to save you money. They can also point out education benefits that you may not know about.
Chances are you received a 1098-E Student Loan Interest Statement in the mail. Good. Save it and give it to your tax guy. This form is for deducting student loan interest from your taxes. Depending on how much interest you paid for the year, you may be able to deduct up to $2,500 in interest paid.
By pulling all-nighters studying for exams you should know that procrastination is not your friend. Get your forms and paperwork together and get it done. Its not hard, trust me. Just take some time and get it done. In the end its far better then worrying about it till the last second.
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