Students can turn to different resources as they file taxes for the 2020 tax year, including the BYU Volunteer Income Tax Assistance and IRS Free File Online programs.
BYU accounting professor Troy Lewis said he is confident that no matter a person’s background, they are interested in how taxes affect their life. “One thing important to know is this: unlike anything else or any other major on campus, every single person is interested in one tax return — their own.”
Properly managing taxes can result in credits and refunds while mismanaging it can result in overpaying and frustration, he said.
While Lewis, a tax expert, said, “being knowledgeable about taxes makes you a very popular person at least one time a year.” He also said no one needs to be completely in the dark about how taxes work. There are many resources students can turn to for guidance.
Volunteer Income Tax Assistance
Volunteer Income Tax Assistance is an IRS-sponsored program, with sites all over the country. Lewis said the BYU program is overseen by faculty members and coordinators and is carried out by certified student volunteers. There are always shift supervisors who are tax experts to instruct volunteers and clarify difficult tax scenarios.
Accounting master’s student Lanie Beard is the lead site coordinator and chief volunteer for the BYU Volunteer Income Tax Assistance program. She’s been working with the program since her freshman year.
Because of the COVID-19 pandemic, this is the first year the program is completely virtual. Beard said there were normally 150 volunteers pre-pandemic, but this year there are about half as many. The program helps complete around 1,000 returns a year.
Lewis said the lab runs from the first week of February to the first week of April, so there is still time for students to request help from the program.
BYU sophomore Joseph Poole and his wife used the program’s services while filing jointly for the first time after getting married. The couple wanted to make sure they understood proper protocol and to see if they could get a decent tax refund.
Poole said he doesn’t think they would’ve gotten as big of a refund as they did without help from the Volunteer Income Tax Assistance program.
“The confusion and ambiguity of taxes is the most daunting part of the process. (The program) helps students know how to make taxes work for them instead of being subject to them,” Poole said.
BYU’s International Hub tax videos
BYU’s International Hub organization consists of student teams who partner with colleges and companies to create and improve international products and projects. Its series of blog posts can be found at unvr.se/intlhubtaxes.
Beard and Poole work with each other at the International Hub. Beard, head of the writing team, and Poole, head of the video team, collaborated to create educational tax content for students. Poole said they recognized how international students would also benefit from understanding how tax filing works for them.
“I realize lots of students, including myself, don’t understand taxes and no one shows you a way to intuitively understand them. Lanie (Beard) and I wanted to make an easily accessible video series to help,” Poole said.
The videos are cover five topics: an introduction to U.S. income taxes, special information for students and non-citizens and information about preparation resources and COVID-19 relief. They can all be accessed at the International Hub website .
IRS Free File Online
Lewis said there is an IRS site called Free File Online that will allow taxpayers to choose a free file option from certain partnering companies who prepare and file federal tax returns on their site for free. Lewis said it is important taxpayers don’t just search “free file online,” but visit the IRS website to get to the correct services.
These partnering companies work with taxpayers if they meet certain circumstances, all varying from company to company, Lewis said.
There are a couple of important questions students need to ask themselves before they begin the tax filing process, he said, and they should remind themselves of a few key details.
Do all students need to file?
“In general, any income you receive is taxable,” Beard said, adding that it’s important for students to recognize there will almost always be a need to file.
Beard said one of the most difficult, complex portions of the tax forms comes from deciding whether students are dependent on or independents from their parents. If they don’t know the answer to which one they are, they should seek help.
What’s different this year?
The CARES Act added many tax form changes, Beard said. Taxpayers should consider professional counsel for their case-specific questions on how their tax filing is affected by stimulus checks.
Lewis said the 2020 tax year Form 1040 includes a section that asks whether a taxpayer received, sold, exchanged or otherwise acquired a financial interest in virtual currency at any time in 2020.
Lewis has noticed many students are interested in cryptocurrency companies such as Ethereum or virtual currency, like Bitcoin. He said the IRS reiterated on its FAQ page the need for taxpayers to answer the aforementioned question correctly.
If all students did was buy virtual currency and did not sell or trade it, they could check the box “no.” However, he said any other action other than solely buying virtual currency will require a “yes” checked box.
In regards to tithing, the Church of Jesus Christ of Latter-day Saints’ website has a “tax forms” area where members can access their charitable donation information for the 2020 tax year, Beard said.
If students who pay tithing would like to know more about how it is included in the charitable donations category on tax forms, they should seek out professional tax advising, Lewis said.
Beard said students need to keep their tax documents for at least three years, after which the IRS cannot audit those tax years.
Both Lewis and Beard stressed the importance of remembering the federal tax deadline April 15. Even though it corresponds horribly with finals week, Lewis said it’s better not to procrastinate.
He said if students are not able to file on time, they can file the extension Form 4868. The form allows taxpayers to extend the time they have to file but does not extend the penalties of not filing.