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Thursday, March 28, 2024

Tips for students filling out tax forms

1098-T. 1099-MISC. 1040-X. W-2.

The language of tax returns can be complicated, but knowing what to look for can save time and money this tax season.

Students need to know their dependency status before they can do anything else, said Vanessa Chaney, a senior tax adviser and tax expert in small business at H&R Block.

Students can't file taxes independently if their parents claim them on their tax return. Parents may claim a student if they pay more than half of his or her school fees until the student is 24 years old, Chaney said.

After that, students should see what credits can be applied to their return. Tax credits reduce how much is paid in taxes and increase refunds. Chaney said students often overlook them.

"People try to do their returns online, and the thing is, it makes it convenient, but doing a tax return online, they can't always know the benefits they're entitled to," she said.

The American Opportunity Tax Credit is a credit for students in their first four years of post-secondary education. It covers costs such as tuition and course materials and is worth up to $2,500, she said.

Students can receive the refund even without having a job, Chaney said.

To get this credit, students must file a 1098-T form, found online at irs.gov. The forms are available to UF students in their myUFL account, she said.

If you've already filed but forgot something, you can use a 1040-X form to update the information, she said.

Teretha McLean, a tax specialist and office manager with H&R Block, said another common problem for students is how their income is reported.

Regular employees receive W-2 forms, but students who the IRS considers self-employed receive a 1099-MISC form with box 7 filled out, she said.

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Those students don't have taxes taken out of each paycheck during the year. Instead, they pay taxes on their net income after weighing it against job-related expenses at the end of the year, Chaney said.

"A lot of times they get themselves in this type of job thinking they're making more money, not knowing at the end of the year they're going to owe the IRS the taxes, the money they haven't been paying in taxes all year," Chaney said.

Returns must be filed by April 17, but people may request an extension to Oct. 17.

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