As fall approaches, most colleges have already begun their fall terms, or will be starting very shortly. It can be daunting to think about leaving home for school; making new friends, taking harder classes, and doing one's own laundry, can all be terrifying prospects. However, the greatest challenge most new college students will face, possibly, is managing their own finances.
Financial management is a critical component of becoming an adult. As many college-age students will be responsible for holding a job while attending school, it is vital to have some sense of how to properly file taxes. With the following simple tips, new college students can avoid making mistakes and the consequent penalties that will be attached to any unpaid taxes.
1. Start the process early. The first instinct of many students is to procrastinate. However, the same tactic that (allegedly) works so well for completing assignments, will not work when it comes to filing taxes. The first step is to collect all relevant documentation. This generally includes any W-2s or, for those who have not received one, a final pay stub that includes information such as income and how much was withheld.
It is also a good idea to gather any necessary forms ahead of time, for both state and federal taxes. If you think you might need help, start looking for support early. Even if you can not afford the assistance of a tax attorney or accountant, most college accounting departments will offer free tax help. Parents can also be useful for helping to decipher complicated tax procedures.
2. File a tax return. Even the most meager of student paychecks can qualify for a tax refund. For those with paychecks too small to necessitate filing, it is still worthwhile, as money might have been withheld. It is always useful to file a return, just in case, because much of the time you may receive money from the IRS in return.
3. Practice. Taxes can be complicated, so even if you are filing electronically, it pays to practice on paper. This allows students to address any issues before trying the online form.
4. Look for tax credits. In an effort to help struggling college students (or parents paying Tuition bills), the government has introduced a number of credits and tax deductions. The three most significant credits available are the Hope Scholarship Credit, the Lifetime Learning Credit, and the Higher Education Expenses Deduction. However, each student is only allowed to claim one of these tax breaks. Do some research, or ask a qualified tax professional, for advice as to which tax credit will be the most beneficial to you.