Income taxes due Friday
By ELIZABETH LEFFALL
A recent report from the Internal Revenue Service showed that although almost 91 percent of the 18 million filers between 18 and 24 earn a refund of $939 or more; students are more prone to miss out by not filing.
An alternative for young taxpayers struggling with tax jargon is here.
Intuit, a California-based company, produces computer software called TurboTax. Now in its 21st tax season and seventh year online, TurboTax is being hailed by many for offering low-cost and paperless tax filing in a format that’s easy to understand.
PC Magazine named TurboTax as its 2004 editor’s choice.
“For new users and those who struggle at taming the 1040, TurboTax’s 2004 line is friendlier, more understandable and quicker to use,” editor Kathy Yakal wrote.
PC World named it the 2005 market leader over H&R Block’s TaxCut and 2nd Story Software’s TaxAct.
To combat the lack of young taxpayers filing, Intuit launched TurboTax more than 10 years ago to target ages 25 and older. A TurboTax representative said the software still wasn’t enough to reach an even younger audience.
In response to the growing number of young consumers, Intuit launched its newest online tax program, RockYourRefund.com in January.
According to Colleen Ferrin, an Intuit spokesperson, the program was created based on research from 300 participants ages 18 to 24 to determine what young adults wanted in this type of Web site.
Ferrin said although many may not see this age group as market-worthy, research conducted by Intuit shows differently.
“[Intuit] knows they’re already online. They’re doing their shopping and chatting too,” Ferrin said. “The next natural transition is to be doing things for their financial situation.”
IRS statistics showed in 2002 of the 26.8 million returns filed, 27 percent came from taxpayers under 30.
Intuit’s new Web site markets a faster, simpler tax return for only $5.95. The company has even joined with Russell Simmons, founder of Def Jam Records to offer taxpayers a Rush Prepaid Visa card.
For those students who don’t have a bank account to deposit their refunds into, only www.RockYourRefund.com offers the Rush card as an alternative.
If the return is processed electronically, the refund can be placed directly on the prepaid card and into the hands of students within a week. The card costs $9.95 and can be used to make regular credit card purchases or at an ATM.
“Before RockYourRefund.com, there wasn’t anything out there for a brand- new tax filer,” Ferrin said.
“Young people are technically savvy. They’re doing everything else online. They might as well file online too.”
The deadline for filing your federal and state income tax is Friday.
Down to the Wire: 2005 Internal Revenue
Service Tax Tips For the College Students
By Elizabeth Leffall
• When are your taxes due?
All returns must be received by midnight or, if mailing, correspondence must have a postmark of April 15, 2005 to be considered timely.
• What form do you file?
Save yourself time by deciding before you begin which tax return is right for you. The IRS 1040 is the longest tax return and includes things like business expenses and foreign income.
The IRS 1040A form is shorter but allows you to include things like unemployment and other pensions and annuities.
The IRS 1040EZ is the shortest form and, as a pattern, is the return of choice for most college students who have only income to report.
Decide for yourself.
Forms and instructions are available at most public libraries, in the Henry Madden Library’s government document section and online.
• Need more time?
Filing extensions are available to those who qualify. Check out Form 4868, which is an application for an automatic extension of time to file your United States Individual Income Tax Return.
• Want your refund?
Sign your return. Did you know that, according to IRS statistics, 1 out of 15 tax returns are sent unsigned?
• Did you work or receive money in 2004?
Include your W-2s and 1099 forms. The IRS cannot verify the amount claimed without them. The IRS receives thousands of returns every season with no documents supporting the taxpayers’ income.
• What happens to those tax returns?
They are eventually sent back to the taxpayer for more information. Save time by including all your information the first time.
• Have knowledge of basic math
The IRS encourages taxpayers to make sure your totals and dollar amounts match. For example, an income of $25,000, and $10,000 withheld for taxes does not equal a refund of $35,000. Review your work. This is a current trend among college students nation-wide.
• Who are you? Make sure you identify yourself
Please complete the entity, or top portion, of your tax return so that the IRS can correctly verify you. The percentage of returns needing research increases annually as taxpayers forget to include their names, address and, most importantly, their social security number.
• Who claims you?
An IRS supervisor said this question seems to baffle students of all ages across the country. You can only be claimed as an exemption once. You cannot claim yourself if someone else (namely your parent or guardian) can claim you.
• Education vs. Life, which one would you chose?
IRS Form 8863 is for Education, Hope and Lifetime learning credits. Read the instructions for this form carefully. Many students qualify. Since January of 2003, the IRS continues to review these forms more closely because of student misuse of the credit. Please be reminded that you cannot take the lifetime learning credit every year. The operative word is lifetime.
• Student loans, what did you do with yours?
When it comes to student loan deductions, remember that it applies to the interest that you have actually paid on. Many students are taking the credit and have not begun repayment of their loans.
• What are you deducting?
In order to benefit from itemizing your deductions, make sure they total more than your standard deduction. If not, the IRS will apply the lower of the two, leaving you with the lesser credit. You can itemize for tax return preparation expenses, medical and dentalexpenses (not paid by your insurance), DMV registration and tags paid, as well as charitable contributions.
• Tuition, how do you get credit?
This is a credit offered on the IRS 1040 tax return. It is called tuition expenses. Make sure you meet the qualifications. No, the cost of books is not to be included in this credit. If your books were your biggest expense for 2004, look into taking the Education and Hope Credit instead (IRS Form 8863).
• Are you a parent?
When it comes to Qualified Child Expenses (IRS Schedule 2441, Schedule 2), Additional Child Tax Credit (IRS Form 8812), Qualified Adoption Expenses (IRS Form 8839) and
Earned Income Credit (IRS Schedule EIC), make sure you qualify. The IRS has seen in the last year an influx of returns from parents disputing over who claims the children. Help the IRS by including documentation with your return supporting your right to claim them.
• Need all the help you can get?
Look into what is called the Earned Income Credit (IRS Schedule EIC). Many taxpayers without children can qualify for up to $390. Read the instructions to see if you qualify.
• Don’t have the time to mail it in?
E-file is the latest tax craze. If you have a certain amount of income and no deductions to itemize, you may qualify to e-file. Imagine getting your refund in less than two weeks. Yes, it is possible with e-file. Even if you owe, you can do it online. Check out the Web site below to see if e-file is right for you. TurboTax and RockYourRefund.com are other online tax programs created with youth in mind.
Still dazed and confused? Call the IRS at 1-800-829-1040 or go online to www.irs.gov.
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