Filing IRS forms can be taxing for college students

If you’re expecting money back, you’ve likely already completed the process, but if you owe and still have yet to do so, it’s crunch time. 

You probably don’t need a reminder about the April 15 filing deadline with the Internal Revenue Service. Used car lots and local furniture stores have reminded you plenty that it’s tax season, each insisting that they’re the preferred outlet for your tax return money.

“I wish schools would make it a priority to teach students the basics of taxes,” said senior tax specialist Inga Lorrah, who discussed common complications, questions and answers that college students have had about filing. “I have young people come in and they’re not aware; they don’t know why they have to pay taxes.”

While nobody enjoys doling out hard-earned money to the government, it is necessary to keep our society moving in a functional manner. Federal and state taxes provide funding for essential services, infrastructure and defense. Our highway systems, judicial systems and military are three important examples of where tax dollars go.

For students, there are tax credits geared to help keep hold of more of their pay-in amounts. Form 1098-T should always be considered when filing taxes. This is a form issued by a university that provides the total amount of tuition that a student has paid in a year. This form helps reduce the cost of college for eligible students through The American Opportunity or Lifetime Learning Credits.

The American Opportunity Credit offers up to $2,500 for qualifying students. Some of the amount is deductible from taxes, the other is a refundable credit. This is actually only one of three refundable credits; the others are the earned income credit and the child tax credit. There is no cut-off age for the American Opportunity Credit; however, it only applies to students who have not yet completed the first four years of college. 

Graduate students or those taking courses to acquire or improve job skills qualify for a Lifetime Learning Credit. While not offering a refundable amount like the American Opportunity Credit, the Lifetime Learning Credit does provide up to a $2,000 tax deductible. Students seeking these tax breaks should also provide receipts to their tax professional for all supplies directly used for their education for guidance, to see what applies.

Many times, it can be more beneficial for students to claim tuition and school expenses on their personal tax information instead of their parents, even if mom and dad are footing the bill. Amounts begin to diminish for those reporting over $80,000 annually and completely phase out when $90,000 annual income is reached (doubling at $160,000-$180,000 if filing as married). 

Students who cannot meet the April 15 deadline can file for an extension, allowing them to complete the process by Oct. 15 to avoid penalties, but interest on what is owed is still accrued.

“A lot of people file an extension because they know that they owe but can’t pay it right now,” Lorrah said. “Never do that. You’re going to owe that amount regardless. So you can file early, by the deadline, and just start paying it out so then you avoid some of that interest for not filing.”

This can be done by setting up an installment plan with the IRS in order to settle up and spread out what you owe over time. These payment plans are also available for paying state taxes as well.