As tax season approaches, University of Memphis students prepareto take on the task of filing their taxes. For most students, theentire process seems to boil down to one simple question -- Howmuch am I going to have to pay?
Many factors are involved in determining how much a student willpay every year in taxes. However, federal student loans,scholarships and grants are typically not included in thesefactors, said Richard Ritzman, U of M director of FinancialAid.
Taxes typically affect financial aid more than financial aidaffects taxes, Ritzman said.
"Students typically will not have to pay taxes on student loans,scholarships or grants,unless the award is greater than the totalcost of tuition, books and housing," he said.
The information a student uses to file their taxes is the sameinformation used in determining the amount of financial aid theywill receive, financial aid officials said. A student's yearlysalary, their number of dependents and other information includedwhen filing taxes will become factors in determining the amountawarded in scholarships, grants or student loans.
"We encourage students to file their taxes as soon as possibleif they have a pretty good idea of what they are going to claimwhen they file," said Ritzman. "By filing earlier, students areable to apply for financial aid earlier, which is beneficialbecause there is a limited amount of money available in some loanprograms, and those loans are awarded to students on a first come,first serve basis."
There are many resourcesto which U of M students can refer whenseeking help with their taxes.
The Internal Revenue Service publication, "Publication 590: TaxBenefits for Education," offers information on tax benefits forstudents receiving financial aid to fund their education. Thepublication can be found at the IRS Web site.
It is possible for a student to deduct their student loaninterest or tuition and fees for education from their taxes, ifthey are eligible, according to the publication.
After the process of filing taxes is complete, many collegestudents look forward to the possibility of a tax refund.
The biggest mistake young people make with their tax refunds isspending the money too quickly, said Monice Robinson, assistantdistrict manger of H & R Block in Memphis.
"The smartest move a college student can make would be to puttheir tax refunds into a savings fund or an IRA," Robinsonsaid.
One aspect of the taxation process college students may neverconsider but cannot always avoid is the possibility of beingaudited.
"Anyone can be audited by the IRS," Robinson said. "You don'thave to necessarily make a mistake when filing to be auditedbecause the process is done at random."
Students seeking help with taxes can contact The U of MFinancial Information and Resource Center at 678-1746.
