Most of students nowadays is work and study at the same time. Some work full time while other work part time, depend on how each students' comfortable level of working and going to school at the same time. As long as an individual hold a job during the calendar year (Jan1 to Dec 31), he will receive a W2 from his employer at the end of the year. Once a person received his W2, then he has to file his federal income tax for that year state on W2. As a student, the federal income tax return is not complicated. Working students may receive at least one W2, or couple W2s if he worked at different jobs during the year. Since it is going to be a very simple return, why not prepare it yourself and save couple hundred dollar for tax prep fee.
Step 1: Understand Your W2 Form
W2 is come in different form. However, the boxes number and what it suppose to show are always the same, no matter what. Below is the W2 image with each box description. For student W2s, most of the time box #1, #3, and #5 are always the same amount. Unless, a person worked for tip during the year then these boxes will have different amount and box #7 will be fill in. The amount in box #7 and plus box #3 will equal to the amount in box #1 most of the time.
Step 2: 1040 EZ Overview
An Individual should use form 1040EZ if all of these following is true
- Your filing status is single or married filing jointly.
- You are not claiming any dependents.
- You are not claiming any adjustments to gross income. Adjustments to gross income are expense that reduce a person total taxable income. As a student, these are not apply to us most of the time, unless you are self-employ.
- You are not claiming any credits other than the Earned Income Credit. As a student
- You, and your spouse if filing jointly, were under age 65 and are not blind as of January 1, 2014.
- Your taxable income is less than $100,000.
- You do not owe any household employment taxes on wages paid to household employees.
- You are not a debtor in a Chapter 11 bankruptcy case filed after Oct. 16, 2005.
- Your income is only from:
- Tips (must be reported in boxes 5 and 7 of Form W-2)
- Unemployment compensation
- Taxable scholarships and fellowship grants
- No more than $1,500 in interest income
- Alaska Permanent Fund dividends
A working-studying student is fit these conditions.
Step 3: Part 1 - Personal Information
I made the picture myself. It doesn't look very good but it is explain on what you should do in this part.
Step 4: Income
Line 1: if you only have one W2 then this number would be found on box #1 of your W2. If you have multiple W2s, then total the amount in Box #1 of each W2s, then fill in the total number in this line.
Line 2: the amount on this line would be the amount of interest you receive from the bank. Usually, the bank would send you the 1098-INT, interest income for the year would be report in box #1.
Line 3: if you receive unemployment compensation during the year, the amount is taxable on federal income tax. Depend on which state you live in, unemployment compensation may or may not taxable. For New Jersey, it is not taxable.
Line 4: is the total amount of line 1, 2, and 3.
*Line 5:(very important) as student, your parent/parents can claim you on their tax return. Ask your parent/parents before complete this line. If your parent/parents is claimed you as dependent on their tax return, you have to check the box next to "YOU" on this line, same thing for the spouse. Then, the amount for this line would be $6,100 for single and $12,200 for couple ($6,100 is the standard deduction for single person in 2014. $12,200 is the standard for married couple in 2014. These amounts are change every year.) If the parent/parents is not claim you or your spouse on their income tax return, then the amount for this line would be $10,000 for single and $20,000 for couple. (This amount include $3,900 exemption for each person. Again
Line 6: is the result from subtraction of line 5 from line 4. [Line 4 - Line 5 = Line 6]
At this point, the amount on line 6 would be use to calculate your income tax, meaning how much tax you owe on this amount. That is why some time, the total wage from W2s is not the actual amount use to calculate income tax.
Step 5: Payment, Credit and Tax
Line 7: if you only have one W2, the amount will be fine in box #2 of form W2. If you have more then one W2s, the amount is the total amount of box #2 of form W2s. If you receive unemployment benefit during the year and have tax withheld from it, make sure to include it in this line as well. The federal tax withheld for unemployment benefit can be found in box #4 of form 1099G.
Line 8a: Earned Income Credit. Most of student will not be qualify for this credit because either you are being claimed on your parent tax return or you are under the age of 25. To qualify for this credit taxpayer and spouse must be at least 25 and under 65 for the tax year. For the 1040EZ, the income limit to qualify for this credit is $14,340 single ($19,680 for married filing jointly).
Line 9: Is the total of line 7 and 8. [Line 7 + Line 8 = Line 9]
Line 10: use the amount on Line 6 in previous step and tax table in Pub 17 to calculate this amount.
Step 6: Refund and Underpayment of Tax
Line 11a: is the result from line 9 and line 10. [Line 9 - Line 10 = Line 11] If the result is a positive number, meaning you over pay your income tax and will receive the refund, the result of the subtraction will be enter on line 11. If the result is a negative number, meaning you underpay your income tax and you will have to send it a check for the IRS. The negative result of this subtraction will be enter on line 12.
Line 11b, c, and d: this is where you enter your bank information if you wish to receive your refund electronically. Also, this section can be fill out when you have to make payment to the IRS if you wish to have the amount deduct from your bank account electronically.
*Form 8888: use this form when you wish to distribute your refund to multiple bank account instead of just one account. For example: husband and wife, even they file the return together, they want to divide the refund into two different account for him and for her.
Line 12: see explanation on line 11.
Step 7: Signing the Return
That is it. We are at the end of the tax return process. My advice is always double check your work from previous step from SSN, W2s wages, and other information that you used to prepare your income tax return. The final step is to sign the return.
If you e-file the tax return using software, then you are going to need the AGI (Adjusted gross income) from your previous tax year.
Congratulation, you did it.
Step 8: Instruction Video
Here is also the link to the instruction for form 1040EZ from the IRS.
I hope this help,
Thank you for reading,