Trying to make taxes sound appealing or easy is about as painful as getting hit by a shovel. There's really no way to make it sound sexy, enjoyable, or entertaining. But, tax season is coming up and you need to be ready!
Have no fear! CollegeInvestr is going to give you a quick 3 step guide to completing your federal taxes. For free!
The steps we're going to take will outline what's needed for most of the college population. If you're single, work a part-time job, are under the age of 26, and still depend on your parents for a majority of your income, this is for you!
Step 1: Gather Your Documents
If you worked for a company throughout the year, you'll be receiving a W-2 from your employer. They have to mail them by January 31st. Once you receive your W-2, make sure it looks correct. If it doesn't, you'll need to talk to your employer and have it corrected.
Here's what a sample W-2 looks like:
If you are under the age of 26 and you're still dependent on your parents or guardians for most of your expenses, then you can still be covered on your parents insurance. You should receive a 1095-A, 1095-B, or 1095-C. That is all dependent on where your parents work and what insurance they have.
The form below is a 1095-C but all of the 1095 forms look very similar.
The 1040ez is the simplest tax form out there. You can print it off OR fill it out online with this handy PDF document (this is the 2015 version), and then submit it. Either way works just fine, but if you fill them out with a pen, use black or blue.
Step 2: Complete the 1040ez
The first part in completing the 1040ez is to complete your basic information. I would advise listing your address as your parents home.
This is the part of the return where you're going to fill out how much money you made this year. This should be in box 1 of your W-2(s). If you have multiple W-2s, add the totals in box 1 together and that's your total for line 1 of the form.
Lines 2 and 3 we won't cover because 99% of you won't have anything to put there.
Line 4 is the sum of lines 1-3. So put your total from line 1 on line 4. This is your Gross Income.
Line 5 is where things get interesting. Now you have to determine if you're a dependent of your parents. This is a very important determination because it could cost your parents if you check the wrong box.
If you are supported primarily by your parents (50% or more) and you're going to school full time, check the box next to "you". That is VERY important. If your parents do not provide more than 50% of your support, don't check the box and write whatever the directions say to write on line 5 for a single individual (only if you are claiming yourself).
If you are being "claimed" by your parents, meaning you checked the box, you will have to do a worksheet on the back of the 1040ez to figure out how much you can claim as a standard deduction from your income. It's very simple math. Once you complete the worksheet, take the number that you came up with and insert it on line 5.
Line 6 is very simple. Take line 4 and subtract line 5 from it and enter it on line 6. This is your taxable income. Line 6 can never be negative, so if line 5 is greater, enter a 0 on line 6.
Payments, Credits, and Tax Section
Line 7 is very easy. Look at Box 2 on your W-2 and put in on line 7.
Line 8a and b are lines that apply to individuals with children, and those who are not being claimed by their parents. We're going to assume most of you don't have children and you are a dependent.
Line 9 is the sum of line 7 and line 8.
Line 10 is a pain, but CollegeInvestr will make it super simple for you. You're calculating your tax as a function of your taxable income that we figured on line 6.
Take the number on line 6 and look for it in this table. It's going to be in a range. For instance if your taxable income was $1,016.17, you'll find the range in the table that says "At least $1,000 but less than $1,025". Then you'll refer to the "single" column that correlates with that row. That number at the intersection of these two will be your tax. Take this number and insert it on line 10.
If your parents have health insurance and you are covered under them, you won't have to worry about line 11. Just check the box that says "full coverage" if that is true about your situation.
On line 12 you add lines 10 and 11. This is your total tax.
Lines 13a, b, c, and d are all very self explanatory. If line 12 is larger than line 9, subtract line 9 from line 12. Most of you will have an entry here. Line 13a is your refund. You'll need to fill out your banking information if you want it deposited in your account.
If line 9 is larger than line 12 you have a problem, you owe. But for most of our readers, this won't apply so we won't be covering it.
The rest of the return is self explanatory and you can handle that without instruction.
Step 3: Submit Your 1040ez
There are two major ways that you can submit your return. You can E-file it, or you can mail it to the IRS.
E-filing Your Return
E-filing is very easy and will allow you to get your money back quicker. The best way to E-file is to use the IRS program called Free File. It will walk you through how to submit your return online and is very helpful. You will have to sign your return.
Mailing Your Return
Mailing your return is a hassle and takes longer. You must print your return, fill it out by hand, fold it, put it in an envelope, put a stamp on it, and mail it. Here's a helpful map that will show you the appropriate IRS branch to send it to (for your state) and their address.
Note: If you added your bank account information to your return on lines 13b, c, and d you will have your refund deposited in your account. If you do not put an account on those lines, they will send your refund to the address you provide in your basic information.
If you'd like to know the status of your return, click this link "Where's My Refund?" and follow the directions.
And that's it! You've just completed your tax return. It's really not that hard. If you take a couple minutes on each step, you could easily do this entire process in 30 minutes or less. Staying organized and keeping track of your documents will help this process go even quicker.
You have nothing to be scared of, and you'll learn a lot about your money by doing this. I really hope you'll give our 3 step process a try this coming tax season and let us know how it goes.
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