Small Amount of Income: Taxes?

March 30, 2009 6:27 AM

Should I file my taxes?

Hokay, tax season brings fun questions from confused people -- and I'm no exception.

I am a college student claimed as a dependent by my parents. I have a small part-time job at university and had a summer job last year. My total income was 5,153.70 (adding both jobs).

So I entered my data on turbotax.com since I used it to file (for free!) last year, when I had a comporable amount of income. Now it wants to charge me filing fees of 29.95 for federal and 39.95 per state (my uni is not in my home state).

Is it worth the bother when my income is not that much? The online program estimated that I owed $1 in GA taxes and $8 in NC taxes. It seems like a pain to pay for e-filing when it's such paltry amounts but I don't want to do anything wrong.

I would appreciate any help and guidance. Finances make me a little stressed out, so I'm trying not to panic.

posted by fantine to Work & Money (13 answers total)

Doesn't matter if you don't make very much - you have to file a return.

There's no need to pay for e-filing, though - just print and mail it in with your tiny little check.
posted by Tomorrowful at 6:29 AM on March 30, 2009

Assuming you don't have any itemized deductions, you should be able to use the IRS Free File online and save yourself a chunk of money.
posted by Fleebnork at 6:30 AM on March 30, 2009

fleebnork, I don't have itemized deductions, so I will check out your link.

Tomorrowful, are the forms I need to fill out on the IRS website? Or do I need to find forms at each state's website? I don't owe any federal taxes.

/tax-idiot
posted by fantine at 6:34 AM on March 30, 2009

The absolute, non-negotiable, #1 rule of tax:

"Always, always, file your tax return."

The #2 rule is "Don't lie about your taxes," but you can't even lie if you don't file a return.

Still, if you can help it, don't pay to file your taxes. If you can't find a way of filing them for free online--and I'm not aware of a way of doing that for state returns, unfortunately--bite the bullet, buy a stamp, and send them in hard-copy.
posted by valkyryn at 6:46 AM on March 30, 2009

taxfreedom.com

posted by Texasjake987 at 6:47 AM on March 30, 2009

Doesn't matter if you don't make very much - you have to file a return.

This is wrong. I found the correct answer by going to www.irs.gov and searching for "who must file" at the top of the page. The first search result is this questionnaire.
posted by fritley at 6:48 AM on March 30, 2009

It's very possible that you don't need to file with that income amount. You're close to the cutoff however, so make sure your income calculation is correct. Go through IRS wizard that fritley links to.

Even if you don't have to, you can file if you want to. But if you are due a refund and want to be paid, you must file. And note that the IRS won't tell you if you need to file state or local returns, so check those out separately.
posted by blue mustard at 6:57 AM on March 30, 2009

Thanks for the questionnaire link, fritley. I followed the steps and it looks like yes, I need to file a tax return.
posted by fantine at 7:02 AM on March 30, 2009

You can probably do federal e-filing for free. I wouldn't ever pay for an Intuit product. Unless you have income sources you aren't telling us about (like scholarships or bank account interest), you probably are not required to file (but please double-check), but you should, as you will be owed a substantial refund if your employers withheld taxes.

It won't be hard to fill out the paper forms (which you can find on the web) and send those in if everything else fails. There is no reason to pay so much to have someone file your taxes for you without assistance.
posted by grouse at 7:07 AM on March 30, 2009

Also: you should absolutely file your taxes this year, because unless you modified your withholdings, you're probably looking at a refund of several hundred dollars or more. $5100 in income probably involves about $400 of income tax withholdings, all of which you can get back, plus the Earned Income Tax Credit, plus about $300 under the Obama stimulus. I'd be surprised if you walked way with less than $900.

So, yeah, file that return.
posted by valkyryn at 7:14 AM on March 30, 2009

Since you're claimed as a dependent by your parents, I'm pretty sure you won't be getting that Earned Income Tax Credit or stimulus money valkyryn mentioned. Still, you should file, as you'll probably get back much of what was withheld from you.

Check the websites for both states taxation agencies. You may be below the minimums required to file there. In any case, once you've done your federal taxes (TurboTax has done the hard work for you; just transfer the numbers over to the paper forms or use FreeFile), your state taxes shouldn't be difficult: just plug in your income data from the federal forms and compute your tax. Some more enlightened states will let you do it online for free from their own websites.
posted by zachlipton at 7:22 AM on March 30, 2009

I second everything zachlipton said.

I would emphasize that you DO NOT ATTEMPT TO CLAIM STIMULUS MONEY OR THE EARNED INCOME CREDIT. They will catch you and you could end up on the IRS potential fraudster list. Not where you want to be if you plan on making lots of money someday.

I would add that professionals are not all sharks. I work at a financial planning firm and we do taxes for our clients and anybody else who want them done. We would charge you ~$70 bucks for an EZ with 2 states. You would drop off your stuff with us, we would fill out all your forms, call you in to review and sign them, file your return and get any refund direct deposited with in two weeks. And we wouldn't try to sell you a usurious "refund advance." Our reasoning is if people have a pleasurable tax experience with us, they may come to us for planning too. It's something to consider (not my firm specifically, obviously).

Also, we do taxes for our clients' kids dirt cheap all the time. If your parents use a pro and haven't filed yet, maybe you can add your return to theirs.
posted by odragul at 9:44 AM on March 30, 2009

IANAL, IANATA, IANACPA...But, when faced with a similar situation a few years back, I was advised by several tax accountants and CPA's that it was worth filing if only to start the "audit clock"ticking.
posted by Fuzzy Dog at 2:15 PM on March 30, 2009