Facing Down Form 1040

For many students, that first job in college means the first tax return. Here are tips for students—and parents—on keeping the tax bill down

by Francesca Di Meglio

Quick midterm question: What does 1040, 1099, and W-2 add up to? Sometimes a headache, if you're a first-time tax filer, as are many college undergrads.

It's tax season, a daunting time of year even for experienced filers. But filing your return doesn't have to be overwhelming. As long as you are honest, follow directions, and take advantage of the help that is available, you should be fine.

Plus, you may have some tax filing resources available right there on campus.

The Haas School of Business at the University of California at Berkeley offers a popular personal finance class that covers all sorts of taxes, including income tax. And the Beta Alpha Psi accounting fraternity at Syracuse University rigorously trains accounting students to help others in the campus community to get their taxes in order.

Homework Assignment

There's another possible perk if you're a business major. Some B-school professors say they're willing to look over their students' returns for free. Edward Taylor, a lecturer in accounting at Boston College's Carroll School of Management, often has students turn in their returns as a homework assignment for his tax course.

Even if you opt to go it alone—say, with the help of TurboTax or some other software—some tax consultants, such as H&R Block (HRB), will answer your questions for free as long as no one on staff has to fill out any paperwork or file for you. And thanks to the IRS, the basics for students are spelled out online at www.irs.gov/individuals/students.

In the meantime, here are five tips that can make tax season easier for the student filer, although not every one may be applicable to every tax situation:

To file or not to file? That is the question on the minds of most undergraduate students. If you have had a job in the last year—any job at all, no matter how little you made—and taxes were withheld from your paycheck, then you must file. If you don't, you are probably missing out on a refund. No self-respecting college student would give up money, right?

Talk to your parents or guardian. One of the hardest parts of the tax form for the first-time filer is deciding whether to claim oneself as a dependent. Co-dependency is impossible for taxpayers. In other words, if your parents are claiming you as a dependent, you can't claim yourself.

There are also restrictions on who gets to make certain education-related deductions—you or Mom and Dad. Therefore, communicating with your parents or guardian is an important first step.

One reason you might decide to claim yourself as a dependent is if you go to a public school and have set up residency in the college or university's home state, says Charles Petz, a certified public accountant and vice-president for tax software development at TaxBrain.com. You can establish residency by spending the summer near campus and working in the state to show you live there year-round.

As an in-state student, you will pay less for tuition, but your parents can no longer claim you as their dependent, says Petz. Families should do the calculations to decide—long before tax season arrives—whether that will save them money in the long run.

On very rare occasions, students earn enough income to claim themselves as dependents. In those cases, determining who would benefit most from claiming your dependency—you or your parents—is the best way to decide.

Get extra credit. Students—or more likely parents, who are the ones usually paying their tuition and claiming them as dependents—are eligible for certain tax credits.