W-2s and the Five Ws: Demystifying Tax Filing
by Abby Bratton | published Feb. 7th, 2019
Many students begin filing for taxes during their college years. Regardless of age, citizenship and work experience, the process can seem complex to those who have not gone through it before. To relieve some of the stress and misconceptions surrounding filing season, Saunders College of Business visiting lecturer John Curran, and International Student Services (ISS) program coordinator Sue Joseph, laid out the five Ws — who, what, when, where and why — of taxes.
Whether or not someone is required to file a tax report depends on their income and U.S. residency status.
“If you’ve generated a certain amount of revenue, gross income, then you’ve got to file a tax return,” Curran explained.
The minimum income threshold is determined by several factors: filing status (single, married, etc.), age, visual ability (legal blindness or lack thereof) and dependency status. The thresholds and requirements for the 2018 tax year can be found here. Domestic students who make less than the threshold number do not need to file, although they may still choose to do so.
For non-residents, the requirements are different.
“International students do have to file taxes, just as American students do. For a lot of our students, though, it’s a completely unknown thing. When they get here [RIT] ... they have a lot of questions about what to do and so our office is here to help them. The main difference is that there are completely different forms that non-residents have to file,” Joseph said. “All of our [international] students ... have to file at least one tax form.”
She added, “If students are here for more than five years in the United States, generally they can file their taxes the same way American citizens can.”
“What is taxed?” Curran asked — a question many first-time filers may pose.
He promptly responded, “Wages are taxed, interest and dividends ... these are the typical things that I would see for college-aged students.”
Federal taxes are only a part of a process, as Curran went on to describe.
“There are two issues to deal with. One is the federal tax ... and then most states, but not all, assess a state income tax,” he said.
New York is among the states that do impose an income tax. However, Curran said that the process for filing federal and state taxes is more or less the same, at least if a student is using an online service.
“You can do a tax return manually, although no one does anymore,” he said. “All sorts of different services are available. So you can simply go online [and] access one of these services. Most of these services or these packages have a very nice flow that basically walks you through, so you don’t need to be a tax professional to actually put a tax return together.”
International students go through a different series of steps, which involves sending a non-resident form to the IRS. To assist with this process, ISS provides international students with a free software program for filling out federal tax forms. For students who are required to file state tax reports as well, ISS recommends a resource called Sprintax that is available for $25.95.
April 15 is the national deadline for filing taxes. However, Curran urges students to begin gathering data earlier.
“I think starting sooner than later is always a good idea,” he said. “Documents are typically sent out from employers, and from those from whom you’ve earned interest and dividends, by the end of January, early February ... If you wait until the very end and you realize, oh, I needed some additional data, then it might be a struggle to find that and be able to file your tax return on time."
"If you’re not able to file on time, you’re able to request an extension of time to file," Curran added. "But it’s important to remember this is an extension of time to file your return, not to pay your taxes."
While the same time frame applies to international students, there are some additional dates Joseph would like them to be aware of in terms of RIT support.
“We offer two workshops every spring. It’s an introduction to filing taxes ... We answer questions that students have, we take them step-by-step through the software, show them how it works,” Joseph said. “It’s March 23 and March 30.”
“You can go to www.irs.gov and you can put your tax return together for free. The same with New York state,” Curran said. “So, if you don’t want to do paper and pencil, which most folks probably don’t because you’re more electronically oriented, being able to do this for free makes sense.”
Although alternate tax report services are available online for purchase, Curran suggested students look to the free government options first.
“Since the filing is free, I would probably take the first crack myself as a student, see what you can do. If you don’t get it or don’t understand it, then I’d reach out to friends, family or professionals,” he said.
In addition to the free tax software Joseph mentioned, ISS offers a variety of resources around RIT to support international students.
“Number one, we have a very extensive website,” Joseph said. “If a student has a really complicated situation and would like to use the services of a tax professional, we have a couple of resources.”
She also encouraged international students with questions to visit the ISS office in the Student Alumni Union.
The circumstances under which students are required to file a tax report were laid out above, but sometimes as Curran said, domestic students who are below the income threshold may still want to file.
“Students might have a withholding against their wages — they made some money and some tax was withheld. So the number one thing for students is, look at your last pay stub in December because that’s available now, or your W-2 ... which will come in the mail, and if there’s something in the withholding box for federal taxes, you most definitely want to go through a calculation to find out, do I owe taxes and/or can I get some of this money back?” Curran explained.
“If you don’t meet the threshold and no tax was withheld, then there’s really not an advantage to filing your returns,” Curran said. “The rules are set. The government says ... if you’re in this threshold, don’t bother us with the paperwork. You don’t have to worry about it and we don’t want to worry about it. If you’re over the threshold, then of course you have to file.”
Words of Wisdom
This article is far from a comprehensive guide of the filing process. Students who have questions should reach out to family, friends or financial advisers, and may find it beneficial to research into subjects like the American Opportunity Tax Credit. Additionally, some general words of wisdom regarding taxes were offered by Joseph and Curran.
“We are international student advisers in this office. We are not tax experts by any stretch of the imagination,” Joseph emphasized. “But our job is to help students with this responsibility that they have ... We don’t always know the answers to every question the students ask us, but we usually can find answers, or find people who know the answers.”
She continued, “The other thing we want to always caution students about is tax scams. We want to let them know that the IRS would never call them up on the phone and ask for personal financial information from them. Unfortunately, there’s a lot of that out there.”
“As far as broad advice goes, gather data,” Curran recommended. “[And] don’t throw the mail out."
Taxes may be a confusing hassle up front, but it certainly becomes manageable once you get started.