Ah, spring is here! Trees, daffodils and tulips are in bud and bloom, days are longer, and the air sweeter, even as April 18 (also known as Tax Day) looms. For some alumni, Tax Day 2016 marks the deadline for filing their first federal income tax returns. Whenever you’re handling something for the first time, it’s always good to have an expert on your side. We turned to one of the professors at Shenandoah University’s Harry F. Byrd, Jr. School of Business for some help. Check out what he has to say to make tax time as stress- and hassle-free as possible.
Helpful Tax Tips for the New Graduate
By Assistant Professor of Accounting Michael Malmfeldt, J.D., CPA, a.k.a., Your Friendly Neighborhood Shenandoah University Tax Professor
You’ve embarked on the journey of “real” life. No more classes, cramming for tests, dorm rooms, cafeteria food, or college stress! You’ve gotten your first “real” job and with it, your first “real” paycheck. This may give you financial freedoms that you have never had before, but unfortunately with this new freedom comes new responsibilities. Many of you may be filing your taxes for the first time. Here are a few tips to help ease that transition a little bit.
You don’t have to be a genius to do your own taxes.
This is especially true if you are single or married with no children and fresh out of school as a traditional undergraduate student. Under those circumstances, you are very likely to qualify to be able to use a 1040EZ form or a 1040A form. These forms are significantly easier to use than the traditional 1040 form. You can easily look up the instructions online and it’s usually just a matter of transferring some information from your W-2 (the form your employer will give you in January stating your earnings info for the previous year) to the tax form and clicking submit. The IRS actually offers free tax software if your income is less than $62,000 that walks you through the whole thing (similar to commercial products like TurboTax). Look for info on the IRS.GOV website.
If you do want to avoid the headache of doing your own taxes, use either an online software or a CPA or an enrolled agent (EA).
This recommendation could also read, “Don’t go to a large national tax preparation chain.” A new graduate will get just as good or better results from Turbo Tax software and it will be cheaper in most cases. If you really want an expert to do your taxes, it may cost a little more, but you are buying peace of mind. In that case, find a local firm that specializes in taxes. Most people don’t realize that the “experts” doing your taxes at many tax prep chains usually have only gone through a few days of training and don’t have any special qualifications to do taxes.
If you ignore my advice above, whatever you do, don’t use one of the tax refund advance services.
Most of the large national tax companies offer some type of product that allows you to get the refund you are anticipating from the government right there on the spot from the tax company, minus the fees that the tax company charges. These fees are usually ridiculously high, and the U.S. Treasury has actually been really good about getting refund money to taxpayers quickly in the last few years. So, if you opt for direct deposit, you are usually only waiting five to 10 days for your refund anyway.
Don’t forget about state taxes.
Most states have state income taxes. Luckily, most states use some variation of the federal system of taxation so if you have already filled out your federal forms, you normally just have to transfer that same info to the state forms, (you may have to do some simple math like multiplying your income by the tax rate, but that’s what calculators are for!)
It’s true that the only certainties in life are death and taxes, but that doesn’t mean you should stress about it. Follow the above advice and remember to file before the April deadline!
If you’re interested in discovering more about business from professors like Malmfeldt, just click below.