It’s completely annoying and nobody likes it, but you, unfortunately, owe the government a portion of your income. Usually, what you owe in tax is withheld from your income throughout the year. You need to file a tax return to know if you overpaid or underpaid your taxes. If you happened to have overpaid, you get a refund (yay!!!!). If you underpaid, you have to pay the balance by April 15th (yuck).
There are tons of details to fret about inbetween, but for now, here the basics of need-to-know tax tips for first time filers:
How to know if you should file a tax return:
If you are depositing checks into your bank account from any kind of job, no matter how big or small, you should file a tax return. The tricky part for young people, especially college students, is determining whether you’re claimed as a dependent by your parents. So know that just because you and your co-worker have almost identical circumstances, you may have to file differently.
You may not be required to file if you don’t reach the minimum gross income. For example, for 2011 the minimum gross income for a single person under 65 was $9,500. There are a lot of variables to consider, however, even if you don’t take in the minimum income, your employer may have withheld taxes. If you don’t file, the government will just keep that money!
What do you need to file?
If you’re an employee, your employer will generally mail or hand-off your W-2 to you. The W-2 is prepared by your employer at the end of the year and is a report of your paid wages and taxes withheld. The information on the W-2 is sent to the IRS and the Social Security Administration.
What do I file with?
To actually file your taxes, you will need to fill out one of three forms:
- 1040EZ: This is the most basic form. And just one page (huzzah!). To choose this form you need a taxable income of less than $50,000 and interest income of less than $400. This form is for the single ladies and men out there with no dependents (party!!!). There is no section to itemize deductions or deduct IRA contributions.
- 1040A: This form has a bit more body to it, allowing for more flexibility in income sources and requires a taxable income of less than $50,000. Again, you cannot itemize deductions but CAN deduct IRA contributions (401K schtuff).
- 1040: This is the mother of all forms and is required if your income is more than $50,000.
Generally speaking, the 1040EZ is probably a fine choice for most students. But, if you’re not quite sure and have some other sources of income and deductions, there’s always the other two choices.
When do I need to pay?
April 15th. Yeehaw.
If you’re a first time filer, the good thing is that you probably don’t have too many moving parts to deal with…unless you happen to be an 18 year old mogul. But still, it can be a bit confusing. The IRS actually now has a 24/7 toll-free number (s 1-800-829-1040) to help answer questions about taxes. You can also find more info at www.irs.gov.
What’s usually not taxable? That’s right, scholarships. (But always double check).