With Tax Day approaching, many students on campus are learning how to file their income tax for the first time. University professors are offering their advice to students on how to file taxes and highlighting the resources available to them. 

This year, Tax Day falls on April 17.

Michelle Hutchens, assistant professor in accountancy, said most students have a baseline understanding of how to do their taxes, especially if their situation doesn’t involve additional complexities.

Students receiving scholarship money in addition to financial aid and students paying student loans may face a more complex tax process than others.

Most domestic students rely on their parents for help in the tax process, Hutchens said. But both international and domestic students should be aware of the available resources to them, including a Registered Student Organization called Tax Advisers for Champaign Society and a community organization called Salt and Light.

Hutchens said the Internal Revenue Service also offers a call center anyone can access if they need assistance.

Additionally, the Voluntary Income Tax Assistance program offers free tax help to people who make less than $54,000 a year and individuals with a disability or limited English-speaking abilities, according to the IRS website. The service is offered by IRS-certified volunteers, who provide free basic income tax return preparation to qualified individuals.

For many students who have jobs, receiving a W-2 and filing their taxes on online sites, such as TurboTax or H&R Block, is not difficult, Hutchens said. 

Students should be aware that truthful reporting of their income is highly encouraged, as you can be audited for “under-reporting,” whether you are a student or not.

When some students fail to report their earnings from tips as waiters or waitresses, it can result in either a correspondence audit, a letter requesting additional documentation from the individual or a field audit, which is conducted in person or over the phone, Hutchens said.

However, it is difficult from the IRS’s perspective to audit tips earned from working as a waiter or waitress, or in any job that receives tips. It can also be difficult for student employees to prove such earnings.

Timothy Bauer, assistant professor in accountancy, said in an email showing zero tips while having a W-2 from a restaurant or a bar can be a red flag to the IRS that someone might be misreporting.

“Tips are wages even if they don’t show up on a W-2. Technically, they are reportable income, and not reporting it can get you in trouble, if the IRS chooses to audit you,” he said. “I don’t think the IRS often chooses to, but they are well within their right.”

If the IRS audits students who fail to report all of their income, the IRS can and will levy fines and penalties, he said. They’ll likely also continue to audit the individual in future years until they think their tax return contains no issues.

Bauer said students should develop skills to do their taxes because it means they are learning about and paying attention to their own financial affairs, including income inflows and expense outflows. He said this is necessary in order to take care of yourself personally.

A question Bauer said students should be asking themselves is if they have the net income needed to do the things they want and, if not, how much they need to change things.

While online services such as TurboTax may have eliminated some of the customers accountants used to manage, accountants usually manage individuals with much more complex situations than what is suitable for TurboTax, Bauer said.

Understanding your tax refund is another crucial skill to have, Bauer said.

He said getting a big refund means you gave the IRS a lot of your money throughout the year instead of having it in your pocket.

“Granted, refunds can be a nice way of forcing us to save money,” Bauer said. “On the other hand, as long as you have money in your account, owing tax at the end of the year isn’t that bad – it means you’ve had more money throughout the year to do with it what you want.”

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