DeKALB — With big reforms for infrastructure planned with the passage of the Infrastructure and Jobs Act, a majority of the funds used to carry out the law’s goals will be tax dollars. Tax filing season officially began on Jan. 24 and with an estimated 160 million Americans filing individual tax returns, there’s no time to waste in filing, especially if you’re a first-time filer.

An estimated 51% of all government revenue, two trillion dollars, came from individual income taxes, according to DataLab’s monitoring of United States funds.

While the age to be a child dependent stops at 19 years old, it can continue to 24 years old if the dependent is a full-time college student, according to the IRS. But that doesn’t mean students are out of the woods quite yet. 

“Even if a student is considered a dependent on their parents’ income tax return, they may still have to file their own income tax return if their income is above the filing threshold for their filing status,” said Kate Manzke, a professor of accountancy at NIU’s College of Business. 

For singles, you legally have to make an income tax return if your taxable income is higher than the threshold of $12,550 with most people having to fill out a standard 1040 form. 

“Employers are required to send employees their earnings statements, called a Form W-2, no later than Jan. 31, so students should receive those forms soon if they haven’t received them already,” Manzke said. 

However, one of the biggest questions students may have is whether scholarships should be counted toward taxable income.

“Students who receive scholarships should know that the portion used to pay for tuition, fees and related course materials is not taxable, but the portion used for other costs, like room and board, should be reported on as income on the student’s tax return,” Manzke said. 

To pay income taxes, there are a variety of options including going to the IRS website, downloading tax return software (such as TurboTax) or visiting an accounting firm. Accounting firms can range in size from big companies like H&R Block or more local firms. 

These methods range in popularity. According to a survey of 1,200 Americans by The College Investor, 46% filed taxes using tax software, 27% with an in-person accountant, 11% virtually through the IRS and 16% of people just did taxes themselves using paper and pen. The survey also found that 58% of the people surveyed paid to file their taxes. 

While using an accountant can be helpful to determine overall income and what is owed to the government, the best thing students can do is be organized and prepare taxes well in advance before the April 18 deadline.

“Taxpayers need to be organized before they start to prepare their income tax returns,” Manzke said. “They should collect all their relevant tax documents before they start to make the process more efficient.”

After taxes are filed, taxpayers can end up receiving a refund from the government if they overpay on their taxes. The average refund in 2021 was $2,873, according to the IRS. 

Electronic payment and direct deposit for refunds are preferred so that the process of tax filing and refund delivery can be sped up, according to a statement from the IRS. 

The budget of the IRS gradually reduced during the 2010s with a budget of $14 billion in 2010 and reaching a low of $10.975 billion in 2018. While the budget has been increased since then, now at $12.039 billion, it’s still not at the level it was over a decade ago, according to the IRS.

“The IRS is a bit buried right now (and) they have faced significant challenges related to the ongoing pandemic,” Manzke said.