Transcript Tax Seminar for Students February 6, 2000

Tax Seminar for
Students
February 8, 2001
By Aaron Metcalf,
MSI
DISCLAIMER
I am NOT a professional tax preparer.
 This is only an information session.
 If you have any questions on your tax
return, please consult the IRS or your tax
preparer.
 Thanks!

Taxes are due April 16, 2001
Definitions
Tax Deduction - this is an amount you can
deduct from your totalled income to give
you your adjusted gross income (AGI). You
use your AGI to figure your tax in the tax
table.
 Tax Credit - After you have figured your
tax, you may be able to subtract certain
amounts from it. These amounts are called
tax credits.

Before you begin:
Make sure you have your W-2 form from
each job you have worked at in the past
year.
 Make sure you have your 1099 form if you
have received any interest from a bank or
savings account.
 Your form from UNTHSC showing how
much you have paid in tuition and fees last
year (Form 1098-T).

Dependent on mom and dad?
- not any more!
 In most of our cases, you will be claiming
yourself as a dependent. Make sure that
your parents are not planning on claiming
you. If they do, this may EXCLUDE you
from some of the deductions and credits
discussed here. Example: You CANNOT
claim the student loan interest deduction if
you are someone else’s dependent.

Which 1040 Form should you
use?
1040EZ
 1040A
 1040

You may file Form 1040EZ if:
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Single or married filing jointly w/ no dependents
Taxpayer (and spouse) under age 65 and not blind
Taxable income is <$50,000
Taxable interest income <$400
NOT reporting dividends, capital gains
distributions, IRA distributions, annuity income,
or social security benefits
Taxpayer did NOT receive any advance earned
income credit payments (EIC)
NO itemized deductions, adjustments to income,
or credits (other than EIC).
You may file Form 1040A if:
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Taxable income is <$50,000
NO itemized deductions
Only adjustments to income are deductions for
IRA contributions and student loan interest
deduction.
Only credits claimed are child and dependent care
credit, credit for the elderly or disabled, adoption
credit, child tax credit, education credits, and EIC.
You may file Form 1040 if:
Taxable income is $50,000 or more
 Itemized deductions
 Income that cannot be reported on Form
1040EZ or 1040A (such as gain from the
sale of property, self-employment)
 Has an interest in a foreign bank account or
trust
 Received nontaxable distributions

Tax Deductions
Standard deduction
 Itemized deductions
 Student loan interest

Standard deduction
Single = $4,400
 Married, filing jointly = $7,350
 Married, filing separately = $3,675
 Head of Household = $6,450

Itemized deduction

You may want to itemize if you:
– have high medical bills
– pay a lot of mortgage interest
– pay a lot of state and local income taxes (note: Texas
does NOT have a state income tax, but you may have
paid other state income tax prior to moving to Texas
this year.)
– contribute large amounts to charity

If these expenses add up to more than the amount
of the standard deduction, the law allows you to
claim this higher total.
Common deductions that you might
take if you choose to itemize:
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Real estate / property tax
Interest paid on your home’s mortgage
Charitable contributions (church, etc)
Income tax from another state
Thrift value of donated items (Goodwill, etc)
Miscellaneous deductions of more than 2% of
your AGI
– These include the cost of the previous year’s
tax preparation, certain legal fees, and some
other deductions.
Mortgage Interest
In MOST cases, you will be able to deduct
ALL of your home mortgage interest.
 Please consult IRS Publication 530 for more
details about the mortgage interest
deduction, as well as the deduction of
certain points and certain real estate taxes.

Deductible Student Loan Interest

What is deductible?
– Interest you paid on your qualified student loan
in 2000.
– You can only deduct interest paid during the
first 60 months that interest payments are
required on the loan.
– Paid interest on a loan taken out only to pay
qualified higher education expenses, such as 1)
tuition & fees, 2) room & board, 3) books,
supplies, & equipment, 4) other necessary
expenses (transportation)
Deductible Student Loan Interest

Income Restrictions
– Single - under $40,000; with phase out from
$40,000-$55,000.
– Married, Filing Jointly - under $60,000; with
phase out from $60,000-$75,000.

CANNOT claim if:
– 1) Married, filing separately
– 2) Listed as a dependent on someone else’s
return
Deductible Student Loan Interest
Do NOT need to itemize to claim this
deduction.
 Maximum deduction

– Student loan interest deduction cannot exceed
$2000

Consult Publication 970, Tax Benefits for
Higher Education for more information or
specifics not listed here.
Deductible Student Loan Interest

If you pay more than $600 in interest during
the year to a single lender, you should
receive a statement at the end of the year
from the lender showing the amount of
interest you paid.
Tax Credits
Lifetime Learning Credit
 Earned Income Credit (EIC)
 Child Tax Credit
 Child and Dependent Care Credit

Lifetime Learning Credit
You can receive a 20% tax credit for the
first $5,000 of tuition and fees paid out-ofpocket.
 Maximum credit is $1,000, per return, NOT
per student.
 You will need to fill out Form 8863
 You must get Form 1098-T from UNTHSC.

Who should you see about
getting this 1098-T form?
Asha Pai, Senior Accountant in Student
Receivables
 Ph# (817)-735-2667
 Email: [email protected]
 You can have her send this form to your
mailbox on campus

Lifetime Learning Credit

You CANNOT claim this if:
– Married, filing separately
– Listed as a dependent on another return
– You or spouse were a nonresident alien for any
part of 2000
– Certain education IRA withdrawals (please seek
more information on specifics)
– You can claim the Hope Credit for the same
student
Lifetime Learning Credit

Adjustments to Qualified Expenses
– If you pay higher education expenses with
certain tax-free funds, you CANNOT claim a
credit for those amounts. These include
scholarships, Pell grants, employer-provided
educational assistance, veterans’ educational
assistance, or any other nontaxable payments
received for educational expenses.

The following do NOT reduce the qualified
expenses: earnings, loans, gifts, inheritance,
or personal savings.
Lifetime Learning Credit

Income Requirements
– You CANNOT claim the Lifetime Learning
Credit if your modified adjusted gross income
is:
– Single: $50,000 or more (phase-out is between
$40,000 and $50,000)
– Married, filing jointly: $100,000 or more
(phase-out is between $80,000 and $100,000)
Earned Income Credit (EIC)

Please refer to IRS publication 596 for more
details.

Your filing status CANNOT be “Married, filing
separately.”
You must be a U.S. citizen or resident alien all
year.
You cannot file Form 2555 or Form 2555EZ.
Your investment income must be $2,400 or less.
You must have earned income.
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EIC if you do NOT have a
qualifying child
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You must be at least age 25, but under age 65.
You CANNOT be the dependent of another
person.
You cannot be a qualifying child of another
person.
You must live in the U.S. more than half the year.
Your earned income must be less than $10,380.
Your modified AGI must be less than $10,380.
EIC if you have a qualifying
child
Your child must meet the relationship, age,
and residency tests.
 Your qualifying child CANNOT be the
qualifying child of another person with a
higher modified AGI.
 You cannot be a qualifying child of another
person.
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EIC if you have a qualifying
child - income #’s
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If you have one qualifying child
– Earned income must be less than $27,413
– Modified AGI must be less than $27,413

If you have more than one qualifying child
– Earned income must be less than $31,152
– Modified AGI must be less than $31,152
Child Tax Credit

You may be able to claim a child tax credit
if you have a qualifying child. The credit
can be as much as $500 for each qualifying
child.
Child Tax Credit

A qualifying child is a child who:
– Is claimed as your dependent,
– Was under age 17 at the end of 2000,
– Is your son, daughter, adopted child, descendant
of a child, stepchild, or foster child, and
– Is an U.S. citizen or resident.
Child Tax Credit

Income limitation and phase-out begin if:
– your tax liability is less than the credit, OR
– your modified AGI is above the amount shown
below
– Single or head of household: $75,000
– Married, filing jointly: $110,000
– Married, filing separately: $55,000
Child Tax Credit

For more information and details, please see
IRS Publication 17.
– This is over 200 pages long, so access this at
school if possible.
Child and Dependent Care Credit

If you paid someone to care for a qualifying
individual so you (and your spouse if you
are married) could work or look for work,
you may be able to claim the credit for child
and dependent care expenses. If you are
married, both you and your spouse must
have earned income, unless one spouse was
either a full-time student or was physically
or mentally incapable of self-care.
Child and Dependent Care Credit
The credit is a percentage, based on your
adjusted gross income, of the amount of
work-related child and dependent care
expenses you paid to a care provider. You
may use up to $2,400 of the expenses paid
in a year for one qualifying individual, or
$4,800 for two or more qualifying
individuals.
 Please see IRS Publication 503 for more
details.

What records should I keep?
Copy C of all W-2 forms
 Forms 1099 showing interest income
 Copies of any other material sent with your
return
 Keep these records for at least 3 years from
the date of the return.
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Helpful Hints
File early
 File electronically
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– you get your refund in 2-3 weeks; a paper
return will take twice as long!
– Efile is more accurate
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Use direct deposit if you expect a refund
How to get tax help.
www.irs.gov
 Call the IRS at 1-800-829-1040
 Call the Taxpayer Advocate at 1-877-7774778
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Some other web sites for help
and information:
www.irs.com
 www.taxplanet.com
 www.hrblock.com
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Where you can file online

www.quicken.com
– you can file for free if your income is $25,000
or less
www.fidelity.com
 www.hdvest.com

– Fidelity and HDVest will allow you to file for
free
Where you can file in person
HR Block
 Wal-mart
 Many, many others
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Where you can file electronically
for FREE in Tarrant County
RD Evans Recreation Center, 3242
Lackland Rd, FW; Tues 10a-2p and Sat
noon-5p
 Town Center Mall, FW; Sat noon-5p
 Fellowship Baptist Church, 956 E Jefferson
Ave, FW; Sat 10a-2p
 Woodland West Branch, Arlington Public
Library, 2837 W Park Row Dr, Arlington;
Wed and Fri 1p-5p

Tax Software
TurboTax by Quicken, $19.95-$5 rebate
(17.95 at Wal-mart)
 TurboTax Deluxe by Quicken, $39.95 -$10
rebate
 Kiplinger Taxcut, $9.99
 Kiplinger Taxcut Deluxe 2000, $19.99
 Sold at Best Buy, CompUSA, Circuit City,
Office Depot, Office Max, Staples, Walmart, and other fine retailers.

DISCLAIMER
I am NOT a professional tax preparer.
 This is only an information session.
 If you have any questions on your tax
return, please consult the IRS or your tax
preparer.
 Thanks!

The End