Filing taxes is commonly known to be challenging, and if you’re a new international student, the process may seem daunting. David Glenn, a certified public accountant and husband of Assistant Professor of Music Melissa Glenn, explained how filing taxes works and provided a method to estimate how much your refund could be.
Glenn said, “A tax return is a form that you file with the Internal Revenue Service (IRS), which is the agency of the government that collects tax. People mix up the word tax return. When you file your tax return with the IRS and have money back, it is called a refund.
“The period of time your tax return covers the first of January to the 31 of December. Right now, we can file tax returns for the calendar year of 2017 and it is due by April 15. When computing tax, it takes your gross income [wages and interest]. If your scholarship is more than your education expenses, the difference between those would be counted as your income and is subject to tax. For example, if you get a scholarship that covers all or some part of your tuition, you do not earn any.”
In most cases, the W-2 form is the only document students need for filing a tax return, Glenn explained.
He also explained how the process of filing taxes works. “When you get paid, if we make $10 per hour and work for 10 hours, that is a $100. Instead of paying $100, they pay you $95. That $5 is held and is paid to IRS and Hawaii. So basically what you didn’t get from your full amount of money, it goes to IRS and Hawaii.
“In the United States, each state has its own level of government, and then we have the federal government, which oversees the entire country. Therefore, there is a national income tax and state income tax. We are paying tax to the state of Hawaii and the Federal government.”
Since filing a tax return takes effort and time, Glenn advised students to consider paying professionals to do it based on how much their refund will be and if it’s worth the effort. However, he also said, “There are many websites where you can prepare and file your tax return. For international students, a common site is www.sprintax.com and for mainland students, there are numerous online offerings. If you're really stuck or want to be 100 percent sure you're doing it right, you could consider hiring a tax professional to prepare and file your return for you.”
If international students would like to know the approximate amount of money that can possibly be refunded through filing a tax return, they will need a W-2 form:
1. Log in to your Workday account
2. Under “Application,” go to “Pay”
3. Under “My Statements,” go to “Tax Documents”
4. Click “View/Print” to get access of your W-2 form
After accessing the W-2 form, there are three pieces of information needed:
1. Box 1 - Wages, tips, other compensation
2. Box 2 - Federal income tax withheld
3. Box 17 - State income tax
Then you can follow the steps provided by Glenn, who gave an example for single students who earn more than $4,050.
If $10,400 is the amount in Box 1, $470 in Box 2 and $370 in Box 3, you can calculate the possible refund with this method:
1. $10,400 (Box 1) - $4050 (Personal exemption of IRS) = $6,350 (Taxable income)
2. $6,350 x 10% (Rate of $0 - $9,325 taxable income bracket) = $635
(See IRS’s Single Taxable Income Tax Brackets and Rates)
3. $635 - $470 (Box 2) = $165
4. $165 is the potential refund you could get from the IRS
To calculate the possible refund from the state:
1. $10,400 (Box 1) - $2,200 (Personal exemption of HI) = $8,200 (Taxable income)
2. $2,400 x 1.4% + ($4,800-$2,400) x 3.2% + ($8,200-$4,800) x 5.5% = $298
(See Hawaii’s Single Taxable Income Tax Brackets and Rates)
3. $298 - $370 (Box 3) = -$72
4. $72 is the refund you could possibly get from the state
Add the two refunds (IRS and state) together to calculate the total amount of tax refund.
$165 + $72 = $237
Glenn said, “For those students who did not earn more than $4,050, you won’t owe any tax, meaning to say for sure you will get all the refunds. You can just add up Box 2 and Box 3, which will be your total refund.
“When we talk about tax law and try to calculate the possible tax return, every situation is different. There might be different rules or exceptions that apply to one situation or doesn’t. Therefore, the following method might vary according to your situation and income.”