<p>As I think most of you know, I’m in my first full-time gig, which also means I get to file my own taxes for the first time this year.</p>
<p>I don’t understand at all how taxes work–I know they take money out of my check every year, and that’s it. Can someone fill me in on how filing a return works? I’m planning to use TurboTax, which will be interesting since i have to file in 3 states (CA resident, grad school in IN, and moved to CO at the end of the year) but I know I’ll figure it out. I just would like to know the why behind filing a tax return.</p>
<p>Thanks in advance!</p>
<p>(I do wish this was something taught in school…oye.)</p>
<p>You will file returns for the states you lived / worked in and the other for the feds. You also get social security and Medicare tax taken out of your check which is not adjustable or refundable. Its a fixed amount so you never have to worry about under paying or overpaying…unless you fall into that Medicare donut tax and are married…I would not worry about that . You need to earn into the 200’s to fall into that category. Multi state taxes are tricky. I would go with an HR Block for your this year. You file a tax return because its the law. </p>
<p>Unless I’m missing something, you only have to file one federal return no matter how many places you lived in (did you even live in CA in 2014, even though you’re a resident?). And you should only have to file state taxes for places where you actually earned money. So even if you lived in CA and went to grad school in IN, unless you had earned income in both of those places, you should only have to file state taxes for CO.</p>
<p>(I’m still trying to figure out how you managed to live in CA, be in grad school in IN, and live in CO all in the same year.)</p>
<p>Agree about multi state and maybe paying someone this year. Turbotax is stronger at the federal level than state - I have had to do some careful checking when doing multistate returns through them for my kids.</p>
<p>teriwtt–I lived in CA for a couple of months in the gap between IN and CO (before I got the job offer.) I did not earn income in CA, have not earned income in CA since 2012.</p>
<p>Is H&R block expensive? I’ve heard from friends that they paid quite a bit of money to have it done there.</p>
<p>The federal tax return should be simple if you have just wage/salary income and possibly a small amount of interest income. You can look at the forms on <a href=“http://www.irs.gov”>http://www.irs.gov</a> (currently, they only have 2013 forms, so don’t actually use those, but you can look to see what they are like; start with the 1040).</p>
<p>Dealing with three states can be messy if you have income resulting in income tax in more than one state. There may be obscure forms for each state for credits for other state income tax that you have to dig for.</p>
<p>If you have not earned any money in CA, then you do not have to file a return there. Phew. You will have to file one federal form and (sigh!) 2 state forms. Try to do your own taxes first by using the free version of the whatever tax software is available for federal, then maybe try doing the state taxes by hand using the forms provided by each state. It is basic algebra, and each line on the form refers to another line for inputs.</p>
<p>H&R charged my friend more than $200 for a basic tax return with a small Sch D. I refuse to pay that much for stuff I can do by hand!</p>
<p>Your employers will send you W-2 forms by the end of January (they are mandated by law to do this). These forms will have your 2014 income and all taxes withheld. If you earned money in Indiana, make sure that your employer has the correct address for you. You should be able to look at your last pay stubs now to determine all the relevant information.</p>
<p>If you look at this – <a href=“http://www.irs.gov/taxtopics/tc352.html”>http://www.irs.gov/taxtopics/tc352.html</a> – it will explain the three tax forms. Most likely you will fill out 1040A or 1040EZ. Look at the description for 1040EZ. If you meet the requirements – you most likely should be able to do your federal taxes yourself – even without a tax program. Click on the link with the form, print the form, and see if you can fill it out. </p>
<p>The state stuff is definitely more complicated – it depends on how the states handle income taxes. According to google, “Colorado’s state income tax rate is a flat 4.63 percent of your federal taxable income, regardless of your income level.” Indiana seems more complicated. Did you earn money in Indiana? It is possible that you could do the Colorado taxes on your own, too. </p>
<p>States – and the feds – do have customer service reps around to help you fill out your taxes. Be wary though – I’ve heard stories of people calling the feds more than once and getting more than one answer. </p>
<p>Those tax prep places are a rip off. Most towns have free consultants to assist you. Not sure if you have to be a ‘senior’ or not! I’m sure they’d help you. There are enough free services these days to do it yourself with the help of an inexpensive do it yourself software.</p>
<p>The why to file a tax return is because you may have taxable income other than your wages, plus the employer may not have withheld the correct amount for your specific circumstances. </p>
<p>Multi-state years are a pain, I have 2 kids to help this year with that issue. My college D earned enough at college that she should have paid estimated taxes here in her home state, I just discovered today. oops!</p>
<p>Another reason to file a return is that you may be owed a refund! Depending on how you filled out your W-4 (withholding) form you may have had too much deducted for federal (or state) taxes, and would be owed a refund if you file a return. On the other hand, you may owe additional taxes if you have under withheld.</p>
<p>On the California tax return, if you really were a California resident for part of 2014 you may have to file a CA 540 return. Of course living in CA for a couple of months does not necessarily make you a California resident. Then again, I am not a tax professional.</p>
<p>You do not want to do an Indiana return manually. The average one is at least 10 pages. Almost every line on the main page has a sub-schedule. H & R Block (and maybe the other main non-CPA players) charge what I consider outrageous fees, usually for simple returns. You can find a local CPA firm to do them much more reasonably and you will have a CPA preparing/reviewing them. Multi-state returns are a pain. I hate them…</p>
<p>I know that I had to file a CA return last year, even though I was not living there, because I was still considered a CA resident (permanent address and DL in CA.) </p>
<p>Last year I actually had to file in CA, IN, and VA (because I worked there for two months doing a summer internship.)</p>
<p>I will ask my mom what she did for me last year; I believe she just used TurboTax. I ended up having to pay CA (which irritated me quite a bit because I didn’t live there more than maybe a month!), but got quite a bit of money back from IN and VA.</p>
<p>Fireandrain, I did earn income in IN, because I held a graduate assistantship which paid a small stipend each month.</p>
<p>If you are still a California resident, then you DO need to file a return in California – but at this point it’s your choice to decide whether or not you consider yourself to be a California resident. Residency is a function of your intent, not history. Do you have a car? Where is your car registered? What state do you have a driver’s license in? Are you registered to vote? In what state?</p>
<p>I’d add that your mom didn’t do you any favors preparing your returns for you – when my kids were in college they did their own tax returns, with help from me as needed. </p>
<p>calmom, I considered myself a CA resident until July of this year, when I changed my car registration to CO and got my CO license.</p>
<p>My mother has owned her own business since 1997, and so took her taxes to her CPA. I earned so little but had to file multiple returns that taking them to the CPA was easier for everyone. I’m going to be doing my taxes for the rest of my life; what does it matter if I start 2 years later than I would have otherwise?</p>
<p>I’m 24 years old with a B.A. and M.S. and working in my chosen field full-time 6 months out of grad school; clearly I’m no worse for wear. 8-| </p>
<p>Calmom will correct me if I’m wrong. I believe NOW you are a CO resident. Your will file state taxes in CO as a resident, and IN as a non-resident. Since you are no longer a resident of CA, and earned no money there in 2014, I don’t believe you need to file CA taxes at all.</p>
<p>You CAN do all of this on Turbotax. The problem comes in when you have multiple states that want to tax your income and making sure the coordination between them comes out properly. If you won’t be multistate after this for some time, that is why you might want to have someone help this year, then do it on your own with Turbotax in the future.</p>
<p>@Thumper1, as I have been reminded, HGFM is 24 years old, has a BA and an MS and a good job, so I’m confident she will be able to figure out this stuff on her own. Fortunately the California Franchise Tax board has a web site that is an authoritative source for this sort of information. </p>
<p>Sorry to have offended you; I should have just gone with the assertion that I’m overly-coddled because my parents wanted to make life a little easier for me while I was in school by doing my taxes, of all things.</p>
<p>Half of America pays money to have professional tax advice/be coddled…whichever perspective you prefer All depends how well you value your time and/or like learning tax law and dealing with the idea you may later be corresponding with tax authorities on something you really don’t understand, especially in the area of multi-state taxation. </p>
<p>CC appears to have a poster base far more comfortable dealing with their own tax prep than I see in the outside world. Some of my best clients are 3 or 4 generation families–am thankful they coddle on down the line!</p>
All depends how well you value your time and/or like learning tax law and dealing with the idea you may later be corresponding with tax authorities on something you really don’t understand, especially in the area of multi-state taxation. </p>