Tax day on April 15 is rapidly approaching and many students in college have never filled out their federal tax return form.
The Internal Revenue Service is offering the new Free File software to help ease the process for first time filers.
The Free File service is a free way for everyone to prepare and submit their federal tax return form electronically.
Twenty different software options are available for new taxpayers at http://www.irs.gov/efile/article/0,,id=118986,00.html.
The software asks the users questions and based on the answers fills out a tax form.
There are two different filing formats online which are free for anyone to use and file their taxes electronically.
There is the Traditional Free File, which is the software suggested for first time users and the Free File Fillable Forms, which is the electronic version of IRS paper form with simple math capability.
There’s a new how-to video available at www.freefile.irs.gov.
Things to Consider When Filing Taxes
–Check with your parents: If you are under age 24, your parents may still claim you as a dependent if they provide more than half of your support.
Your parents can claim you as a dependent or you can claim yourself, but not both. So, talk over your taxes before you start.–File a return: If you had federal taxes withheld from your paycheck in 2009, you should file a tax return – even if you are not required. There’s a good chance you could get a refund.
–Use Direct Deposit: When you combine direct deposit with e-file you can get your refund in as few as 10 days.
–Gather records: Employees will receive a Form W-2, a statement for your income and taxes withheld. You still must report all your income, including tips. Remember, all income is taxable unless exempted by Congress.
By the way, good record keeping throughout the year makes this whole tax preparation process a lot easier. See Taxable Income For Students.–Grants, scholarships and fellowships: Amounts spent on room and board may be taxable while the money spent for tuition, books and fees may be exempt. ROTC allowances are not taxable, but ROTC active duty payments are taxable. See Tax Information For Students.
–Expanded education credits: The new American Opportunity Credit provides a maximum $2,500 credit for tuition, books and fees.
–Heads up: If your parents claim you as a dependent, they get to take the credit. Otherwise, you get to take the credit in most cases. For details, see Publication 970, Tax Benefits for Education.
Only the person who made the tuition expenditure can claim this credit. So, if your parents are footing your bill, they get to claim the credit.–Recovery Tax Credits: In addition to education credits, the American Recovery and Reinvestment Act provided new benefits for homebuyers, energy upgrades, new vehicle owners and workers through the Making Work Pay Tax Credit. See http://www.irs.gov/recovery for more details.
–Earned Income Tax Credit: If you’re 25 or older, you may be eligible even if you have no children. See http://www.irs.gov/eitc for details.
–Save a little; spend a little: Another new provision this year lets you also use your refund to purchase U.S. Savings Bonds.