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Pete and Alex discuss the complicated world of filing taxes.
Know the Terms
If you worked last year and you’re eligible to file taxes by April 15 of this year, you might be holding out until April to figure out when to delve into the W-2 and 1040 paperwork sitting on your desk - or your floor. But if you’ve never filed your taxes before, or if you have and you’re just putting it off because it makes you nervous, we want you to know you’re not alone. There are resources available to help!
To give you a quick breakdown, by the end of January of every year, if you worked the year before, you should expect to receive a W-2 in the mail. Don’t ignore it. It’s a breakdown of how much money you made last year. And if you worked for more than one employer, you’ll get a W-2 form from each one.
Your next decision will likely be which form to complete. The basic federal (IRS) form is called a 1040. But of course, there are a few different versions. The 1040-EZ is intended for those who made a lower salary and had few other major forms of income or expense in the previous year. Things get a bit more complicated as you move up from 1040-EZ, to 1040, and 1040-A. It all depends on how much you made and what expenses you had that need to be “itemized,” or separated out, individually.
Read the Instructions
It may sound simple, but this might be one of the trickiest things when it comes to filing taxes. For your federal and state tax forms (yes, you will have to do both), there are a long list of instructions that - believe it or not - are intended to help you better understand how to fill out your tax forms.
If you happened to work in two or more states last year - maybe you worked out of state for the summer and on campus during the school year - you will want to read up on the instructions for whether or not you will have to file for each state where you worked.
And while all the tough terms usually lead to an endless strand of Google definition and Yahoo! Answer searches that leave you more confused than you were when you first started searching, the good thing is, this is where you can ask for help.
Know Your Resources
The IU Maurer School of Law and Kelley School of Business have partnered up to provide students with a tax assistance program through the VITA program. As long as you made under $51,000 in 2014, their services are available to you for free. They are available and located in the law school until March 25. For more details on how it works and what to bring, click here (http://info.law.indiana.edu/releases/iu/2014/02/maurer-kelley-free-tax-assistance.shtml). In fact, there are a number of different free tax assistance sites around the community, provided by the Monroe County United Way. If you made under $53,000 last year, you could also take advantage of their Free Community Tax Service https://www.monroeunitedway.org/FreeTaxes).
Of course, if you just want to file on your own, there are a ridiculous number of options online. But one of the more popular resources, and the one Alex mentions on the podcast, is turbotax.intuit.com. However, be aware of scammers who send enticing e-mails - sometimes even on behalf of services like TurboTax. Another great option that we recommend is MyFreeTaxes.com. This is the same site that the Monroe County sites use.
However you file, just make sure to do it on time and don’t avoid it. It can be a burdensome task the longer you wait; free assistance resources become scarce; and the lines to get help grow longer.
Then, if and when you get a refund check, use your MoneySmarts to strategize ways to save it, spend it, or put it back into your student loans to lessen the amount of interest you’ll pay on them. For more ideas on what you could do with your refund check, check out some of our other money management tips (http://moneysmarts.iu.edu/tips/basics/index.shtml).Season 4: 02/23/2015