Bob Mahan, associate professor of accounting, limited his responses to U.S. or federal individual income tax documents such as Form 1040EZ, 1040A and 1040.
Q. How much money did I have to make in 2002 before required to file a return?
A. The answer you would think is simple. Alas, if only such things existed within our federal income tax system. The general rule (I’ll bypass the complications as best as I can) for filing depends on a couple of items: 1) your filing status (single, married filing a joint return...etc.) and 2) whether you can be claimed as a dependent on your parents income tax return for the same year.
If you are not claimed as a dependent by your parents and you are not married, you are required to file once your income exceeds $7,700. If you are claimed then the amount is $4,700. If you are married as of Dec. 31, 2002 and we’ll assume you are not claimed by the parents of either spouse, you must file once your income exceeds $13,850.
All that being said, you would WANT to file even if not required to do so if there has been any income taxes withheld - as shown on your W-2 form. If you are below the required income levels I mentioned above, then you may be entitled to a full refund of what was withheld.
Q. What paperwork do I need on hand to file my return?
A. For most students the “paperwork” would be their Form W-2 and maybe some bank account/CD interest and dividend income. All the paperwork should be retained, in case of any discrepancies. In most cases, only the federal copy of the W-2 needs to be attached to the return.
Q. I’m graduating this year. Should my parents claim me as a deduction on their return?
A.Well, it isn’t like your parents have a choice. If you meet the tax code qualifications as their dependent, then you cannot file as “independent” even if they don’t claim you. From your parent’s perspective, assuming they would want to be [paying] the least income tax as possible, they should claim you on their return as long as you qualify.
Q. I’m an independent student. What deductions can I take?
A. If you are a full time student and also do not own a home, then your deductions are a bit limited. Your deductions available are basically the same as if you are claimed by your parents.
Q. When can I expect a refund check?
A. Assuming you are entitled to a refund, the average refund time is four to six weeks. This may be shortened if you file early.
Q. I was self-employed in 2002. Do I have to file a return?
A.If you have ANY self-employment income you are required to file once your self-employment earnings (gross, before considering any expenses) exceed $400. You also must complete a Schedule C and you may be subject to self-employment tax.
Q. I received a large monetary gift in 2002. Does this affect my taxable income?
A. No. Gifts received are not subject to income tax. If, however, you invest the gift money and earn interest and/or dividends, then those earnings would be reported.
Q. I don’t want to bother filing my own taxes. Where can I go for professional reliable assistance?
A. There are many places you could go to get professional tax help. For college students I would suggest H&R Block or something similar. Look in the phone book or visit the Mall in Johnson City. I have noticed tax preparers who set up shop in walk areas. You could also go to the IRS office in the Am-South building off of Sunset Drive. The IRS charges no fee, you need to ask the other places.