Winthrop University: My Money Matters - Taxes - Who, What and When?

Taxes

Who, What and When?

Who Needs to File a Federal Tax Return?

In general, if you have earned income (such as wages, salaries and tips) in any given year, then you must file federal and state tax returns for that year. More specifically, if any of the situations on the following list apply to you, then you’re looking at filing a federal tax return:

  • Had tax withheld from your wages
  • Are entitled to the Earned Income Tax Credit
  • Are self-employed with net earnings (profit) greater than $400.
  • Made contributions or withdrawals from your qualified retirement plans
  • Received tips and will owe social security or Medicare taxes on them

More details regarding the requirements behind filing a federal tax return can be found at: www.irs.gov/Individuals/

When and How Do We File?

Preparing your tax returns can sometimes be an intimidating proposition, but here’s a very brief guide to starting that process. And, as we mention below, students can get help right on Winthrop’s campus: our Accounting and Finance honor society, Beta Alpha Psi, also offers free tax assistance for our students through the VITA program.

The filing deadline for your federal and state income tax returns is normally April 15. If you are unable to file on time, you can request a six month extension. However, this “extension” is only an extension of time to file your tax returns. It is not an extension of time to actually pay any taxes you might owe. You tax liability is still due on April 15, even if you are granted an extension to file your returns.

Preparing your taxes is a step-by-step approach.  It can be sometimes intimidating if you think about it all at once.  But, if you break it down into smaller steps, it's really not too bad.  Here's a basic flowchart that outlines what you'll need to do:

flowchart

What if I Can't Pay My Taxes?

If you don't have the cash to pay your taxes on April 15, and are unable to borrow the money from a relative or friend, you still have a few options. You can pay by credit card, ask for a short-term extension, and even propose an installment payment agreement with the IRS. If you ignore your tax bill entirely, not only will interest and penalties accrue, but the IRS's tax enforcement and collection powers include the ability to record liens on your property and levy to secure or satisfy such liens.  You don't want that! 

But, note that the interest rate that the credit card company charges may be higher than what the IRS charges on late payments. You can make credit card payments through certain tax software programs or by calling 888/272-9829. Fees may be associated with this option. A short-term extension will give you up to 120 days to pay. No fee is charged, but a late payment penalty plus interest will apply. An installment agreement is a monthly payment plan with the IRS. You enter into an installment payment agreement by informing the IRS that you are unable to make full payment of taxes. Your tax liability may be spread out over three years, and payments can be made through payroll deduction. You will generally be expected to pay the maximum installment amount that you can afford. You will not avoid interest and penalties with this payment method, but you will avoid more severe collection action. A one-time fee is charged to establish the installment agreement.

Low cost options to prepare your tax returns: If your AGI is less than $57,000, most software providers will let you use their basic tax software on line for free. However, you will still need to pay about $30 for software for your state tax returns.

Remember: at Winthrop University, our Accounting and Finance honor society, Beta Alpha Psi, also offers free tax assistance for our students through the VITA program.

Last Updated: 7/13/22