Tax season is upon us once again, and this year some good news finally comes your way. The IRS has extended its deadline from April 15 to April 17. Before you procrastinate too much, this isn’t a huge extension. The 15th falls on a Sunday this year, and with Monday April 16 being a holiday observed in the District of Columbia (Ever heard of Emancipation Day? Neither have I), Tuesday is the day the IRS settled on.

But by this point on the calendar you should have already received your W-2 from your employer. Employers are given until January 31 to postmark your Wage and Tax Statement form. You should only be receiving one of these, but if you switched jobs throughout the year you’ll receive a separate form for each place of employment.

Other forms you may receive are specific to the type of income earned. Some methods of income may be deductible and others not, but for the most part, if you got paid, so will the IRS.

For example, interest earned on savings accounts is taxable, but interest earned from a qualified retirement plan is deductible. Any account which earns more than $10 of interest throughout the year requires that the bank send you a 1099-INT. Although, you may not have to worry too much about your interest from savings.

Considering the abysmal rates offered by banks these days, and the slim-to-none balance of most students’ accounts, odds are you didn’t earn that much last year. However, you are still required to report the interest income on your 1040, even if your bank didn’t send you the form.

The main goal in preparing your taxes is to avoid having to pay the IRS. When you have taxes taken from your wages, you could end up paying more than your share, so the IRS will issue you a refund to make up the difference. An employee who has elected to have the maximum amount withdrawn from each paycheck is most likely to receive a refund. Those employees who like to fiddle with their information, like claiming too many exemptions, could end up having to pay the difference come tax season.

So how do you avoid having to cut a check to Uncle Sam? Tax shelters. Not the Cayman Island type – or the Al Capone, money-laundering type either – but legitimate, IRS-sanctioned tax shelters help you manipulate your tax situation.

It works like this: The total amount of money you earn in a year is called your gross earnings. This number is lowered by deductions of various types. The final tally of earnings minus deductions is called your adjusted gross income (AGI). Also, certain tax credits are applicable to certain situations, such as the American Opportunity and the Lifetime Learning Credit in the case of higher education.

The most common deduction a typical college student will qualify for is the 401(k). For this reason, I highly recommend you max out your deposits to your 401(k) at work. Also for this reason, I highly encourage you to find employment with a company that offers one.

The 401(k), which serves as a personal retirement account in which both you and your employer deposit money, will greatly reduce your tax liability. The money is deposited before you get your paycheck, and you get to chose what percent of your income gets deposited. The best part is that your employer (sometimes) will match your deposits dollar for dollar, up to a certain percent. Find out how much that match is, and contribute exactly that much.

I once worked for a company that matched my contributions up to 6 percent; meaning that for every $100 I earned, I deposited $6 and the company also deposited $6. So at the end of the year, if you earned gross wages of $20,000 and contributed 6 percent with an employer match, you will have at least $2,400 by the end of the year in your 401(k), which is tax deductible and results in an AGI of $17,600, putting you in a lesser tax bracket, which means less tax liability!
Tax law, all 48,000-plus pages of it, can be incredibly complicated. What it all boils down to is reducing your AGI with various deductions and credits, thereby limiting your exposure to Uncle Sam’s pocket picking.

Do yourself a huge favor and visit IRS.gov to check out the resources available to students filing taxes. Also, Cal State Fullerton has a great program on campus called the Volunteer Income Tax Assistance (VITA). Contact them at 657-278-8681 or csufvita@gmail.com to see if you qualify for their free tax services.