In the midst of tax season, there is often confusion about the tax filing process, especially for college students who have to deal with extra forms.
Filing taxes is required by state and federal law if the file limit has been reached. Once an individual has made income amounting to the file limit, he or she must file. The Illinois state file limit is $2,050, and the federal limit is $5,950. If the state file limit is met but not the federal, only state taxes are required for that individual.
Specific paperwork is needed in order to file taxes.
“You definitely need any W-2’s you have,” said Michelle Halpert, professional tax preparer at Jackson Hewitt, 2022 Sycamore Road. “For school, you need a 1098-T. If you’ve got kids, bring any daycare information you may have. You need your ID and social security card, too.”
Some students are eligible for the American Opportunity Tax Credit, which can add up to $2,500 to a student’s tax return.
“Someone who is not filing as a dependent for their parent could be eligible for the American Opportunity Credit,” said Carme Gregory, H&R Block office director, 2600 DeKalb Ave. in Sycamore. “Students receive a 1098-T, but if they’re smart, they’ll also print out the actual statement of tuition, grants, scholarships and fees. Many charges don’t come up on the 1098-T.”
Both Gregory and Halpert said tax preparation usually doesn’t take more than an hour, but there can be extenuating circumstances.
“Each experience is different based on what they have to have done. Some people have to go back years in tax information for past filings if there is an issue,” said Tanya Moore, tax preparation specialist at Jackson Hewitt, 7119 Walton St. in Rockford.
Free federal tax preparation is frequently offered this time of year. In addition to tax offices, a variety of online tax preparation services are available. The Internal Revenue Service website, www.irs.gov, offers a list of free file services, which are various tax services available online for free.
Online tax services all file electronically. This option is also available at most tax preparation services, as it is what the IRS recommends.
“If someone is eligible to electronic file, they should,” Gregory said. “The alternative is mailing it in. If it’s mailed in, it could be eight to 12 weeks before you get your return, and you run the risk of it getting lost. Electronic filing is just a better way of doing it.”
If an individual exceeds the file limit, and does not file the corresponding requirements, they can be punished by state and federal governments which can include repossession of capital and possible prison time.