04/12/2001
Previous | Next | Personal Finance Home | Career Corner | Health | Issues
The IRS will once again take center stage Monday, when millions of taxpayers will crowd post offices across the country in an 11th-hour dash to file their tax returns before the midnight deadline. Millions more will head to their computers to use tax software and online services to electronically file returns.
For many college students, surrendering a portion of their salary to Uncle Sam may be a new experience. Tax professionals say students should be aware their tax liabilities can extend beyond their earned income.
"They need to remember not everything from the University is tax-free," said Edward Schnee, a professor in the Culverhouse School of Accountancy. "If their scholarship exceeds books, fees and tuition, that's taxable."
Interest, stock dividends and income from mutual funds are also subject to taxation.
Completing a tax return may seem like a daunting task, but help is readily available. Listings for Certified Public Accountants fill two pages in the Tuscaloosa Yellow Pages, and the IRS offers a free help hot line at 1-800-829-1040.
Schnee cautioned that practitioners may sometimes provide erroneous information, but the IRS still holds the taxpayer accountable for mistakes.
"You're still responsible for filing a correct return, even if you're given inaccurate information," he said.
Robert Ingram Jr., a CPA with Tuscaloosa's Jessup & Associates, said the best precaution students can take to avoid errors and save time is to keep track of their financial data.
"It's amazing the time people consume trying to rebuild their records," Ingram said. "If you don't keep orderly records, you may end up owing on things you didn't know you owed on, and you'll lose out on some deductions that you should've had."
Electronic filing is another way to reduce a taxpayer's margin of error, Ingram said.
"It's easier. It costs less, and you can get a quicker refund," he said.
On its Web site, the IRS says citizens who e-file typically receive refunds in two to three weeks.
About 35 million people prepared their returns electronically last year, creating a booming market for Internet tax assistance. Web sites such as CompleteTax.com and TaxACT.com provide visitors access to their preparation programs or e-filing services for a small fee. HDVest.com offers users free filing regardless of their income level.
Schnee said students should be weary of sites that claim to procure instant refunds for people who use their services.
"Many of these advertisements I see where they do e-filing and get refunds for you fast are actually loans with very high interest rates," he said.
Schnee also warned that tax information stored in cyberspace could be vulnerable to hackers. CNN reported last month that General Accounting Office investigators found security holes in the IRS's e-filing technology.
"I wouldn't put my finances online and trust there to be good security," Schnee said.
Regardless of how students opt to file returns, Ingram has one piece of advice for all of them: Don't procrastinate.
"No one wants to do this when the weather turns warm," he said. "You've got to do the same work, anyway, so go ahead and get it done and enjoy the spring."
More information about income tax preparation and filing can be found on the IRS's Web site at www.irs.gov.
(c) 2001 The Crimson White via ISPI News ServiceThe views and opinions expressed in these articles do not necessarily reflect those of College Central Network, Inc. or its affiliates. Reference to any company, organization, product, or service does not constitute endorsement by College Central Network, Inc., its affiliates or associated companies. The information provided is not intended to replace the advice or guidance of your legal, financial, or medical professional.