IRS Encourages Filing Taxes Online

IRS spokeswoman Valerie Thornton said online filing is a faster, safer and more convenient alternative to filing taxes on paper.

Thornton said online filing uses computers designed to eliminate common mathematical errors. Less than 1 percent of returns filed online contain errors, compared to about 18 percent to 20 percent of those filed on paper, she said.

To file online, students should browse the list of companies on the IRS Web site, http://www.irs.gov. Most offer online filing to taxpayers for free or for a charge of less than $10 based on total income.

Thornton said online filing is especially advantageous for college students.

"College students are more technologically proficient," Thornton said. "They are accustomed to using computers as a part of their daily life. I would certainly encourage people to file online."

But some University students are still unfamiliar with the process of filing taxes online, and others are not sure whether this method will offer substantial improvements over the traditional method.

Greg Fillmore, a junior biology major, said he will file his tax returns on paper because it will be easier, although he had originally planned to file online.

"I lost the PIN number they sent me, so now I'll just probably file them on paper," Fillmore said.

Thornton also stressed the need for students to inquire about various tax deductions that might be available to them.

One such option is the deduction of up to $2,500 for interest paid on a student loan that was used to pay qualified expenses.

But this deduction cannot be claimed if the student is claimed as a dependent of another taxpayer or if the student is married but filing separately.

The Hope Credit and Lifetime Learning Credit are education credits that can be subtracted in full from federal income tax, rather than just deducted from taxable income.

The Hope Credit can be worth up to $1,500 per student per year, and the Lifetime Learning Credit can be worth a maximum credit of $1,000.

But both cannot be claimed by a student in the same year and cannot be claimed if the student is a dependent.

For degree candidates, portions of scholarship grants used for tuition or books can also be excluded from taxable income.

Generally, taxable income for students typically includes wages and salaries, self-employment income, investment income such as interest and some scholarships and fellowships.

No matter what deduction options students have available to them, students must pay close attention to the fine print on tax returns, Thornton said.

She also said students should carefully review their tax forms -- no matter which method they use to file tax returns -- before submitting them to avoid common errors such as failing to sign them or making basic mathematical mistakes.

"Sometimes a parent thinks they know every family member's Social Security number," Thornton said. "But (the parent) gets it wrong because they didn't double-check it."

The State & National Editor can be reached at stntdesk@unc.edu.