By Adriana Elizondo
Apr. 15 is right around the corner, and Uncle Sam will expect taxpayers to do their civic duty and have their annual taxes filed by then. Truth be told a lot of students do not fully understand the whole concept of tax forms, deductions, credits and the new laws for filing 2018 taxes. Everyone wants to receive money, but are people actually filing their taxes correctly, so they can receive the largest refund?
NTCC Accounting Professor Alan Carter, who became a CPA in 1982, has been teaching business classes at NTCC since its doors first opened 35 years ago. He recently took time out to offer some tips on preparing taxes and the new changes and laws that took effect this year. Carter said all single students should first consult with their parents before filing a tax return.
That is critical because the laws that changed this year are going to affect whether it is in single students’ best interest to file their own tax return and claim themselves or continue allowing their parents to claim them.
“As long as single students are under the age of 24 and still attending college, parents can still claim the student regardless of whether the student is working,” Carter said. “The reason why this is important to know, is that whoever claims the student as a dependent is where the education credits will follow.”
Northeast student Diana Hernandez, who is working toward getting her associates degree in general studies, will be filing her taxes for the first time this year.
“I was going to be filing online, with a free service,” Hernandez said. She was unaware of the new laws or that her mother could continue to claim her. Hernandez said once she turned 18 last October, she assumed that her mother would no longer be allowed to claim her as a dependent.
Carter said students and their parents need to have a conversation to establish dependency status. While students are required to file taxes to receive a refund for money they paid in while working, they still need to specify if someone else claims them as a dependent on a tax return. Single students cannot claim any credits or deductions that their parents are already taking.
Another law that changed this year does not impact single students, but affects non-traditional students who have children and file a Child Tax Credit. This credit applies only to dependents who are younger than 17. So, instead of getting up to $1,000 per child, the Child Tax Credit has now increased to $2,000 per child. This credit gives a parent or guardian of a child a bit of an income boost from previous years.
Nursing student and mother of three children, with one on the way, Elizabeth Cortes-Ramirez said, “I didn’t even notice the credit on my tax return.” Cortes-Ramirez adds, “After I had filed I heard other people talk about getting a bigger credit deduction for their 2018 tax return, but since I had only worked six months in 2018 I wasn’t expecting much. I’m sort of new at all this filing process.”
When it came to filing her return, Cortes-Ramirez knew that finding someone she trusted was her first priority. Giving personal, confidential information was a concern. “Nowadays it’s not easy to trust people,” she said. “I asked co-workers and friends for advice on who they recommended. I have my kids with me most of the time and going office to office wasn’t an option for me, that’s why I decided to file online again.”
Students will likely be receiving various tax documents with required information needed for filing a return. These records would come from the college, student loan lenders and employers. Students should try to keep these documents in a secure location, because misplacing or losing them could delay the filing process.
The 1098T, Tuition Statement form is currently available on the NTCC Student Portal under the Financial tab. This form includes information for the student or their parents to report an education credit – such as tuition paid, related expenses, any scholarships or grants received and any adjustments from 2018. Students are urged to contact a tax professional or visit www.irs.gov if they have any questions about the form.
According to www.studentaid.ed.gov, a student’s dependency status determines whose information must be reported on the FAFSA form. If the student is a dependent, he or she will need to report the parents’ information. If students are independent, they will need to report their own information (and if students are married, their spouses). For students who do not live with their parents, they still must answer the questions about their parents if they’re considered a dependent student. For more information visit the F&Q page on the FAFSA website.
How taxpayers file a return is entirely up to them. If a person is single with no children and has a W2 form from an employer, it may be as simple as going online and finding a free filing service. However, for someone married with children or an entrepreneur with a business, it may be best to consult with a professional licensed CPA.
Carter also said that people should be aware of phone scams. He said if the IRS is trying to contact a person, they will do so through a letter, not a phone call.