Mar 292009
 
Authors: Scott Callahan

Deadline

Citizens must file taxes by April 15 at midnight

Missed deadlines require the filing of a mail-in extension form, with a valid reason given and payment included.

Before filing, make sure to have:

Social Security Card (make sure to spell the name exactly and make sure the card does not say “not valid for employment”).

Picture ID (such as a driver’s license or military ID).

A proof of income including a W-2, or 1099 form.

Local tax experts said paycheck stubs are not sufficient.

A record of all expenses to log on the tax form, which include tuition and student loans.

Student loans and tuition are only recorded on the tax form if the student, not his or her parent, is paying. If a person’s parents pay these, the student cannot add on tax forms.

(Information courtesy of Kathy Henderson, the office manager for Jackson Hewitt Tax Service)

Forms

Henderson suggested using the online 1040EZ form accessible on the IRS Web site

To itemize deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.

Ten important facts about tuition and fees

1. You do not have to itemize to take the Tuition and Fees deduction. You claim a tuition and fees deduction up to $4,000 by completing Form 8917 and submitting it with your Form 1040 or Form 1040A.

2. You may be able to claim qualified tuition and fees expenses as either an adjustment to income, a Hope or Lifetime Learning credit, or, if applicable, as a business expense.

3. You cannot take the tuition and fees deduction on your income tax return if your filing status is married filing separately.

4. You cannot take the deduction if you are claimed, or can be claimed, as a dependent on someone else’s return.

5. The deduction is reduced or eliminated if your modified adjusted gross income exceeds certain limits, based on your filing status.

6. You cannot claim the tuition and fees deduction if you or anyone else claims the Hope or Lifetime Learning credit for the same student in the same year.

7. If the educational expenses are also allowable as a business expense, the tuition and fees deduction may be claimed in conjunction with a business expense deduction, but the same expenses cannot be deducted twice.

8. You cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance.

9. The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan.

10. IRS Publication 970, Tax Benefits for Education, can help eligible parents and students understand the special rules that apply and decide which tax break to claim. The publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

(Information courtesy of the IRS Web site)

Common Mistakes

“Head of household” implies you have children. Do not mark “1” on W-4 (or any form).

Henderson recommended entering 0 or 1 on the total number of allowances you claim (line 5 of W-4).

If you put a number too high, that means you will receive more money but have to pay the taxes later. But if you put the recommended number, you will likely receive less on your paycheck, but will receive the remainder in return.

Decide with your parents on who is claiming loans and tuitions money; you can only claim it once.

Internal Revenue Service e-File Internet Tax Filing

According the IRS site, more Americans are utilizing online tax filing systems because they are efficient and free.

Taxpayers who use e-file and who choose direct deposit can receive their refund in as few as 10 days.

In 2008 nearly 27 million people prepared their own e-file return, a 19 percent increase from the previous year.

The average refund was $2,429 in 2008.

IRS e-file totaled nearly 90 million tax returns in 2008 (almost 58 percent of all returns were filed electronically).

Internet filing runs error check when finished. The error rate is significantly reduced from 20 percent with paper returns to about 1 percent with e-filed returns.

(Information courtesy of the IRS Web site)

Staff writer Scott Callahan can be reached at news@collegian.com.

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