Taxes are required contributions that individuals or corporations pay to fund government expenditures. These can include infrastructure such as roads or highways, public education programs, or welfare programs. Income, property, goods, interest, and gains on investment are examples of taxable assets.
1) Gather all necessary information relevant to your socieoeconomic and working status.
Typical forms for college students include:
W2 Form: from your employer, taxes withheld from your paycheck
Form 1099: record that some entity or person other than your employer gave or paid you money, for funds over $600
Form 1098-T: tuition paid, scholarships, expenses in the past year
Form 8863: education credits
Form 1098-E: deduct interest paid on student loans (over $600)
2) Select a filing status (single, married, etc..)
3) Use a platform to help you accurately file your taxes and payments
TAX FILING SERVICES
We recommend...
TURBOTAX
Free for college students with no capital gains tax (no stock, bonds, real estate, etc. sales
IRS Free File
IRS offers free guided tax software for individuals with taxable incomes below $79,000.
HOW?
WHO?
Single individuals under 65 only file taxes if they have gross annual incomes (the sum of all forms of earnings) over 12,950 dollars.
WHEN?
“Tax day” is usually around April 15 - 18 each year.
Your tax rate will depend on your tax bracket. The more income you make, the higher the tax rate. Those in lower tax brackets can qualify for government benefits.
FAQ: Should I refuse a raise to remain in a lower tax bracket?
Answer: NO
Only the income above each bracket's threshold is taxed at a higher rate. For instance, if you earn $45,000, only the amount over $40,000 is taxed at the higher bracket rate, not the entire income.
* Some states do not impose any income taxes
WHAT?
Finding ways to lower your tax burden.
HOW?
Deductions & retirement or investment accounts
DEDUCTIONS AND CREDITS
WHAT ARE THEY?
The IRS gives “discounts” on taxes to encourage certain activities.
EXAMPLES:
Charitable donations, investing in clean vehicles or clean home energy, paying for higher education
HIGHER EDUCATION CREDITS:
American Opportunity Tax Credit
This can only be applied once, and you must do it the year you are starting college
Lifetime Learning Credit
No limit for number of years you can claim this credit; $2000 on qualified education expenses
RETIREMENT AND INVESTMENT ACCOUNTS
IRA
Self-managed savings or investment account for accumulating wealth for retirement. Can offer tax breaks such as tax-deferred or income tax-free growth.
401k
Employer-sponsered retirnment savings plan. It allows you to take money directly out of your packcheck and invest it with huge tax breaks.
Types of 401ks:
Traditional: With a traditional 401k, you pay taxes on the money up front. Earnings are tax deferred until you withdraw the money at retirment.
Roth: With a roth 401k, you have no upfront tax breaks. But collecting the money at retirnement (as long as you are at least 59.5 and have had the account for more than five years) is tax-free.
Traditional vs. Roth 401k: You can use both types of accounts! Often people with high earning potential prefer Roth 401ks because they will likely be in a higher tax bracket in the future.
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