Imagine skipping a day of class, then coming into the next session and seeing a test. You open the packet and see what appears to be gibberish staring back at you. Everyone else around you seems to have a perfect grasp of what’s going on, but you’re just stumbling in the dark.

That can be what the process of preparing your taxes can feel like the first time you do them. You’re given a big pile of paper and expected to sort it out yourself. It’s easy to get overwhelmed.

Before you start to panic, though, take a deep breath. There are a few questions that might make your life much easier. Grab that big stack of paper and ask yourself …

Do I even have to file?

There’s an easy way to short circuit this whole process. If you didn’t make much money last year, you don’t have to file taxes. If your earned income (wages and tips) is less than $6,300 and your unearned income (interest and dividends) is less than $1,050, you probably don’t have to file taxes.

Of course, you might still want to do so. If you had a summer job, your employer took taxes out of your paycheck as though you’d been working all year. You might be able to get a little bit of a refund for your effort.

How hard does this have to be?

If your tax situation is relatively simple, you may be eligible to use a form called the 1040-EZ (as in easy). It’s a much more straightforward document. You just enter your wages, your filing status (married or single) and the taxes you’ve already paid. It’s all laid out on your W-2, the form you got in the mail or online from your employer.

The 1040-EZ lives up to its name. It’s one page long. Once you put your name, address and Social Security number on it, you’re about halfway done. You don’t get to claim any tax credits, but there aren’t a lot of tax credits available for college students in any case.

Where can I get help?

You don’t have to go it alone. If you’re feeling antisocial, you can (and should) use an e-filing service. The IRS has a tool to help you pick the best one. Remember, members of Wasatch Peaks can save up to $15 on TurboTax®!

There may also be tax help available. A program called the Volunteer Income Tax Assistance (VITA) is available on many college campuses. Business students looking to bolster their resumes will frequently volunteer to help with taxes for free. This is especially important if your tax situation is more complicated, like if you’re paying for college on your own or have self-employment income from a side hustle.

Are you stressed about taxes? Tell us about it in the comments, or pop down and help your fellow students out!

Sources:
https://www.irs.gov/individuals/free-tax-return-preparation-for-you-by-volunteers
http://blog.taxact.com/1040-tax-forms/
http://www.nolo.com/legal-encyclopedia/when-does-your-child-have-file-tax-return.html

Published in Blog
Tuesday, 21 February 2017 09:08

Tips for a Great Tax Season

I hope you enjoyed the President’s Day holiday. Our kids were out of school on Friday & Monday, so we had a long weekend full of fun times. President’s Day reminds me of tax season. Although IRS technically started accepting tax returns on January 23rd, most of us have not filed because we were waiting for information. Also, some returns weren’t being processed at that time. For example, if you are claiming the refundable portion of the Child Tax Credit or if you are claiming the Earned Income Tax Credit and were receiving a refund, it wouldn’t be paid before February 15th. Now, tax season is definitely here. Unless you are waiting on some K-1s or 1099s, you probably have the forms that you need in order to file your taxes.

I recently attended an 8 hour seminar highlighting the updates for taxes - by the way, that was the short class. The long one was 2 days. Some things in life never change, but tax law isn’t one of those unchangeable things. For this post I’ll mention some of the tax topics that I think the readers here will appreciate. Apply each topic to your situation.

Filing Deadlines

Partnership returns are due on March 15th now, which falls on a Wednesday this year. By the way, whenever a tax filing deadline falls on a weekend, taxes are due on the following Monday. Because April 15th falls on a Saturday and Emancipation day is observed on Monday, April 17th, the tax filing deadline is April 18th this year for individual filers and businesses filing an 1120. (See IRS for more information.)

Tip: If you have some investment accounts, you will want to wait until the final 1099s are sent out. Last year I worked on several tax returns that we thought had the final 1099s, but a few weeks after they were filed, another 1099 was received. Some of these 1099s were not received until mid-March. It is easier, cheaper, and better to wait to file than to amend a return, but returns can be amended. Regardless of when you file, I recommend you prepare the information you’ll need for your return now!

Retirement

You have until your tax return filing deadline to contribute to your IRA accounts! For most of us, that is April 18th. Each year my husband and I try to reach our $5,500 limit for IRA contributions. Some years we do and some years we don’t even get close, but we aim for it. Having a few extra months helps me. If you haven’t started contributing to an IRA, I recommend you start with a small amount. That’s how we started. How much do you want to contribute before the tax deadline? You need to know this in order to file your taxes. For specifics, check here.

Tip: Always be aware of phase-out amounts. This means that if you earn over certain amounts, the credit or deduction “phases” out until you aren’t allowed any of that benefit. You can look up the specific phase-out amounts for the deduction or credit you may be wondering about. Just because a deduction is generally allowed, doesn’t mean it will be allowed for you. For example, if you are married, the phase-out range for the American Opportunity Tax credit is $160,000-$180,000. This means that as your income reaches $160,000, the credit will ratably be reduced, and if you make over $180,000, it will be gone. I often hear someone say “that is tax deductible” in conversation. I think to myself that it depends on the taxpayer’s income. Student loan interest is tax deductible unless you earn over the phase-out amount. I won’t list all of them here, but you can easily check them on IRS’s website for any deduction or credit that you are considering.

Tax Withholdings

Will you be receiving a huge refund? Emotionally, it feels great to get a large refund. I understand this! I know I’m swimming upstream to suggest that you adjust your withholding, but a large refund means that you are letting the government hold your money. I try to withhold just enough to get a small refund.

Some people tell me that they don’t have the self discipline to save throughout the year so at least that forces them to save. I get that. However, USING your budget will solve this problem, and you can get off that wagon. I’ll get off my budgeting “soapbox” now.

Watch out for Tax Fraud

IRS is trying to protect against this. If you want to read more information about possible fraud, click here.

Identity theft is a big problem right now. I personally have a friend who wasn’t able to file her taxes electronically because someone had fraudulently used her social security to file taxes.

PATH Act

This was an important law passed at the end of 2015. Some tax provisions were made permanentsuch as Child Tax Credit, AOTC - American Opportunity Tax Credit, & Tax Free transfer from IRA to charity.

Other tax provisions were extended. For example, the deduction of mortgage insurance premiums was extended through 2016. This is a nice deduction if it applies to you.

The IRS website is a great resource for tax topics. I hope your tax season goes well!

Friday, 20 January 2017 13:10

Beware of Tax Scams!

Tax season is here, and unfortunately that also means that “tax scams” are here as well. Every tax season, there are more schemes targeting innocent taxpayers through phone calls, emails, in person, and even through social media channels. Some call to “verify” tax return information over the phone, some demand payments for a fake “Federal Student Tax,” and some impersonate tax preparers. Whatever the scheme, taxpayers need to vigilant against the scammers. Here are several tips to avoid being a victim:

Scams can sound convincing. These con artists use fake IRS identification badge numbers that appear to be legitimate. They usually alter the caller ID to make it look like the IRS is calling.

Scammers might have your information. use online resources to get your information. They may know a lot about their target such as the victim’s name, address, and even the last four digits of the victim’s Social Security number. They will use this information to make the call sound official.

Scams use scare tactics. If the victim doesn’t answer, the caller will likely leave an “urgent” callback request. If the victim does answer but refuses to cooperate, the caller may become hostile and insulting. They will may threats of police arrest, deportation, or license revocation. They may call back from other numbers or send emails pretending to be the local police or DMV to support their calls.

Scams ask taxpayers about a wide range of topics. Emails seek practically any information, from filing status to verifying PIN details. Scam emails can look like official communications from the IRS or others in the tax industry. When victims follow the email links sent to them, the official-looking websites ask for personal information.

The real IRS will never:

• Call you and demand payment. The IRS will not call you about your tax bill without first sending you a bill in the mail.
• Ask for your credit card or debit card information over the phone.
• Require that you use a specific payment method such as a prepaid debit card, gift card or wire transfer.
• Threaten you to have the police arrest you for not paying.
• Initiate contact with you by phone, text, email, or social media channels to request your personal or financial information.

What should you do if you get a phone call that you think is a scam?

• Do not give out any information. Hang up immediately.
• Report the incident to TIGTA at 1.800.366.4484 or at www.tigta.gov.
• If phone scammers target you, also contact the Federal Trade Commission at FTC.gov. Use their “FTC Complaint Assistant” to report the scam. Please add "IRS Telephone Scam" to the comments of your complaint.

What should you do if you get an email that you think is a scam?

• Do not respond to the email or click on the links.
• Forward the scam emails to the IRS at

If you know or think you might owe taxes, call the IRS at 800-829-1040 to talk about payment options.

For more information and resources, you can visit https://www.irs.gov/uac/tax-scams-consumer-alerts.

Published in Alerts
Tuesday, 26 January 2016 15:56

Beware of IRS Tax Scams

Expanded Outreach Effort Announced to Prevent More Losses to IRS Impersonators

WASHINGTON — The Treasury Inspector General for Tax Administration (TIGTA) urged taxpayers to remain on “High Alert” and announced additional outreach efforts to prevent them from falling victim to criminals who impersonate Internal Revenue Service and Treasury employees this filing season.

“The phone fraud scam has become an epidemic, robbing taxpayers of millions of dollars of their money,” said J. Russell George, the Treasury Inspector General for Tax Administration. “We are making progress in our investigation of this scam, resulting in the successful prosecution of some individuals associated with it over the past year,” he said, adding that over the summer, a ringleader was sentenced to more than 14 years in federal prison. “However, this is still a matter of high investigative priority.”

TIGTA continues to receive reports of thousands of contacts every month in which individuals fraudulently claiming to be IRS officials make unsolicited calls and “robocalls” to taxpayers and demanding that they send them cash, he said.

“As the tax filing season begins, it is critical that all taxpayers continue to be wary of unsolicited telephone calls and e-mails from individuals claiming to be IRS and Treasury employees,” said the Inspector General. “This scam has proven to be the largest of its kind that we have ever seen. The callers are aggressive and relentless,” he said. “Once they have your attention, they will say anything to con you out of your hard-earned cash,” George added. “We will be very aggressive in pursuing those perpetrating this fraud,” the Inspector General said. “In the meantime, we need to do even more to warn taxpayers not to fall for it,” he added.

TIGTA has received reports of roughly 896,000 contacts since October 2013 and has become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam, in which criminals make unsolicited calls to taxpayers fraudulently claiming to be IRS officials and demanding that they send them cash via prepaid debit cards, money orders or wire transfers from their banks.

“The number of people receiving these unsolicited calls from individuals who fraudulently claim to represent the IRS is growing at an alarming rate,” George said. “At all times, especially around the time of the tax filing season, we want to make sure that taxpayers are alerted to this scam so they are not harmed by these criminals,” he said, adding, “Do not become a victim.”

“This is a crime of opportunity, so the best thing you can do to protect yourself is to take away the opportunity,” the Inspector General added. “If someone unexpectedly calls claiming to be from the IRS and uses threatening language if you do not pay immediately, that is a sign that it is not the IRS calling, and your cue to hang up,” he said. “Again, do not engage with these callers. If they call you, hang up the telephone.”

Inspector General George noted that the scam has hit taxpayers in every State in the country. Callers claiming to be from the IRS tell intended victims they owe taxes and must pay using a pre-paid debit card, money order or a wire transfer. The scammers threaten those who refuse to pay with being charged for a criminal violation, a grand jury indictment, immediate arrest, deportation or loss of a business or driver’s license.

Here is what you need to know. The IRS generally first contacts people by mail – not by phone – about unpaid taxes and the IRS will not ask for payment using a prepaid debit card, a money order or wire a transfer. The IRS also will not ask for a credit card number over the phone. The callers who commit this fraud often:

  • Utilize an automated robocall machine.
  • Use common names and fake IRS badge numbers.
  • May know the last four digits of the victim’s Social Security Number.
  • Make caller ID information appear as if the IRS is calling.
  • Aggressively demand immediate payment to avoid being criminally charged or arrested.
  • Claim that hanging up the telephone will cause the immediate issuance of an arrest warrant for unpaid taxes.
  • Send bogus IRS e-mails to support their scam.
  • Call a second or third time claiming to be the police or department of motor vehicles, and the caller ID again supports their claim.

If you get a call from someone claiming to be with the IRS asking for a payment, here’s what to do:

  • If you owe Federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
  • If you do not owe taxes, fill out the “IRS Impersonation scam” form on TIGTA’s website, www.tigta.gov, or call TIGTA at 800-366-4484.
  • You can also file a complaint with the Federal Trade Commission at www.FTC.gov. Add “IRS Telephone Scam" to the comments in your complaint.

TIGTA encourages taxpayers to be alert to phone and e-mail scams that use the IRS name. The IRS will never request personal or financial information by e-mail, text, or any social media. You should forward scam e-mails to . Do not open any attachments or click on any links in those e-mails.
Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes winner) and solicitations (such as debt relief) that fraudulently claim to be from the IRS.

Published in Alerts
Monday, 11 January 2016 15:53

How Does Health Care Reform Affect You?

When it was first passed, I didn’t pay a lot of attention to the Affordable Care Act (ACA) or more commonly known as ObamaCare–which includes the Patient Protection and Affordable Care Act, and the Health Care and Education Reconciliation Act. The .pdf of this act is 974 pages of law, so this little post will not attempt to be a comprehensive summary of it. No, this is my family’s experience with it.

The first change that we noticed after the law went into place was that the amount deducted out of my husband’s paycheck for health insurance doubled in September 2014. Since our health insurance was provided through my husband’s employer, and the cost was still very reasonable, we continued on without any changes until July 2015.

We had health insurance provided through Ty’s employer until one month after his position was eliminated. Because health insurance was one of the major issues that we faced during our unemployment period, I started becoming familiar with the ACA as I depended on our insurance agent to guide me through finding health insurance. Since then, I’ve taken a class about the ACA and I continue to learn more about it in preparation for tax season.

  • Tax Returns- Most all of the forms needed for individuals will be mailed out by the end of January. If you fall into one of these categories, make sure you receive the appropriate Health care forms, which you’ll need in order to file taxes. I will be looking for a 1095-B in my mailbox.

1095-A: if you went through the Marketplace for insurance
1095-B: if you bought directly through a health insurance provider
1095-C: if you were covered by an employer who provided health insurance coverage referred to as “self-insured coverage”

  • 60-Day Exemption Period- Unless you meet one of the longer term exemption requirements, which my family didn’t, I learned that there is 60 days exemption period from the health insurance requirement. I didn’t feel comfortable being uninsured for any amount of time, and I knew it would most likely take longer than 60 days to get coverage through new employment.
  • Qualifying Events- Under the law, health insurance needs to meet certain requirements to be considered qualified coverage. As I was shopping for insurance, I really wanted to find a short term policy that would cover us for a few months (under six months,) which is the time period I expected to be ineligible for employer-sponsored health insurance. I learned that not all insurance qualifies as minimum essential coverage. So, we could have insurance, but still not meet the law’s requirements. Also, we must experience a qualifying event in order to purchase insurance outside of the open enrollment period. Unemployment was a qualifying event for us, and we wouldn’t be able to purchase different coverage unless we had another qualifying event.
  • Tax Credit- There is a possible tax credit, but you must purchase health coverage through the Marketplace. My family didn’t purchase through the Marketplace. Why? Because, I couldn’t see into the future and didn’t know what our income was going to be for the year. I had no idea how long we would be unemployed or ineligible for employer-sponsored health insurance. We purchased a similar policy to the one we had previously had through our employer. It cost about the same amount that my friends with similar sized families paid. We used emergency savings to pay for health insurance during this time.

I hope my experience helps your family make the best decision you can make. Please share your experience and help us all navigate through health insurance related issues. Every time I read the ACA or talk to someone about their experience, I learn something new about it. For more information, go to the IRS.

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