STUDENT TAX PREPARATION: DIFFERENT METHODS OF PREPARING YOUR TAX RETURN
Every Canadian college student knows by now that their income is taxable. Yes, you still need to pay tax on that very low income. U. S. students need to prepare a tax return every year to reduce their tax burden to the barest minimum. You can choose to prepare your tax return by yourself, use tax software, get a relative or friend to help you do it or hire a CPA with over 15 years’ experience. Whatever your choice is, you must know that it is your responsibility to ensure that your tax return is accurate.
1. Preparing Your Tax Return by Yourself
The truth is that preparing your tax return manually is the easiest way to get the job done. Doing it yourself only requires devoting a few hours to understanding the tax code. Most young people have a simple tax situation so it’s quite easy to prepare your tax on your own if you are sure that you understand how it is done. One of the advantages of preparing your tax yourself is that it makes you more knowledgeable about income taxes than the average citizen. You will, however, need to follow instructions and do some arithmetic to get an accurate tax return. Doing so helps you to maximize refund and benefit.
2. Use Tax Software
Another method of student tax preparation is the use of tax software. There are a number of them out there that are free to use. If you know how to use the software, you will achieve a well-prepared return. But if you do not, you may have a hard time entering relevant data and getting an accurate return. While this method is relatively low-cost and trustworthy, it can be time-consuming. Several questions must be answered before you can start preparing your return. Additionally, the software is not designed for complex tax situations.
3. Ask a Relative or Friend for Help
If you cannot prepare your tax return by yourself and cannot use the tax software, you can ask a family member or friend who is knowledgeable about the process to help you. It is a cheap method of getting the job done. But you cannot leave the job entirely to them with the hope that they will come up with something perfect and help you to maximize refund and benefit. You still need to learn about the tax code for you to be able to check their work and verify that all the necessary details have been included.
4. Outsource To a CPA With Over 15 Years’ Experience
This is the most expensive method of preparing a grad student’s tax return. But the job is sure to be thorough. You need to know, however, that most professional tax preparers are not very knowledgeable about student income tax returns. They often specialize in preparing tax returns for businesses and individuals who work and earn a considerable amount of money. Grad students should use other methods of preparing tax returns if their situation is not complicated.
You need to know some basic information about student tax preparation. You should know the details that should be included in your tax return, learn how to calculate your taxable income and know where your income should be reported on the form. Knowing these can help you to generate and check your tax return.