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What's a good affordable software for tax prep as a student? Filing for family and friends
Hey everyone, I'm currently finishing up my third year in the accounting program at state university and want to start helping out by filing taxes for my circle of friends and family. Nothing too complicated yet, but I'd like to get some real-world experience to supplement what I'm learning in class. I'm looking for something that won't break the bank since I'm still a student (those textbooks are already killing me financially lol), but also something professional enough that I can use to properly file for multiple people. I've only ever used TurboTax for my own super simple returns in the past. Any recommendations on affordable software that would be good for someone in my position? Ideally something that can handle a few basic schedules and forms beyond just the standard 1040. Thanks in advance!
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What Changes Are Coming to 2022 Form 1040 and Schedule 1? Key Updates You Need to Know
I just saw that the IRS released drafts of the new Form 1040 and Schedule 1 for 2022 yesterday. Wanted to share some of the major changes I noticed since these will affect how we all file next year. The crypto/digital asset question got way more detailed. It used to just ask if you "received, sold, exchanged, or disposed of virtual currency" in 2021. Now for 2022, it specifically asks if you: "(a) received (as a reward, award, or compensation) or (b) sold, exchanged, gift or otherwise disposed of a digital asset (or financial interest in a digital asset)." Looks like they're casting a wider net. The biggest change I see is on Line 1 for wage reporting. Instead of just a single line for wages, they've expanded it into 10 parts (a-i, & z): - Line 1a: W-2 Wages - Line 1b: Household employee wages not on W-2 - Line 1c: Unreported tip income - Line 1d: Medicaid waiver payments - Line 1e: Taxable dependent care benefits - Line 1f: Employer adoption benefits - Line 1g: Form 8919 wages - Line 1h: Other earned income - Line 1i: Nontaxable combat pay - Line 1z: Total of all the above They've also added a checkbox on line 6c for the lump sum Social Security reporting method. On Schedule 1, there are changes to the "Other Income" section with new specific lines for: - Scholarship/fellowship grants not on W-2 - Nontaxable Medicaid waiver payments included on Form 1040 - Pension/annuity from nonqualified deferred comp or non-gov section 457 plans - Wages earned while incarcerated Also, they removed the section blocks on page 2 and made some changes to the EIC reporting. Anyone else notice anything significant in these drafts?
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Does anyone know if the expanded Line 1 for wages will affect how we report income from gig work? I drive for Uber and do DoorDash, and I'm never sure if that should go on Line 1 or Schedule C. With these changes, would that fall under "Line 1h: Other earned income"?
Your gig work from Uber and DoorDash shouldn't go on Line 1h. That income is considered self-employment income and should continue to be reported on Schedule C. The "Other earned income" on Line 1h is generally for earnings that are treated as wages but don't fit in the other categories. As a self-employed gig worker, you'll still report your income and expenses on Schedule C, calculate your net profit or loss, and then that flows to Schedule 1 and ultimately to Form 1040. These changes to Line 1 don't change the fundamental way gig workers report their income.
Will tax software be ready for these changes? I always use TurboTax but I'm worried these new form lines will cause problems, especially with all my crypto transactions from 2022.
Tax software companies update their programs every year based on IRS changes. TurboTax, H&R Block, and other major tax software should have all the new form changes implemented before filing season begins. They usually start updating their systems as soon as the IRS finalizes the forms.
What does Settlement Date mean on my tax refund direct deposit? Will funds be held?
So I finally got my tax refund to show up in my bank account today, but it's showing as "pending" with a note that says (Settlement date 4/17/2025). I was hoping to use some of this money this weekend for a few bills that are coming due. Does anyone know if this means the money won't actually be available in my account until the 17th? Or is there a chance it will clear sooner? This is with Chase bank if that makes any difference. I'm just confused because in previous years it seemed like the money was available right away once it showed up.
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Former bank employee here. Settlement dates are mostly relevant to the banks, not to customers. Here's what happens with tax refunds: 1. IRS initiates the ACH transfer 2. Your bank receives notification of incoming funds 3. Most banks will make the funds available before actual settlement 4. Settlement date is when the interbank transfer actually finalizes Chase is usually pretty quick with government deposits. Have you checked if there's a hold specifically placed on the deposit? Sometimes large deposits get automatic holds.
Thank you for the detailed explanation! I called Chase this morning and they said there's no specific hold, but they do have a standard processing time for ACH transfers. The customer service rep told me the money should be available tomorrow, which is 3 days before the settlement date. That matches what you're saying about them making funds available before actual settlement.
Glad to hear it's working out! That's typical for Chase. They usually release tax refund funds within 1-2 business days of receiving the ACH notification, regardless of the settlement date. The settlement date is more about the backend banking processes than when you can access your money. If you want to avoid this next year, some tax preparation services offer options to receive your refund on a prepaid card which sometimes posts a bit faster than traditional bank ACH transfers. Though personally, I think waiting an extra day or two for the money to hit your regular account is worth avoiding the fees those cards sometimes charge.
PSA for everyone: If you're waiting on your refund and need to know exactly when it will be available, don't just trust what the banking app shows! Call your bank directly and ask specifically about "funds availability for IRS direct deposits" - that's the magic phrase that gets you the right answer. Different banks have different policies. Credit unions often make funds available immediately, while bigger banks might hold them for 1-2 business days even though the money is technically there.
This is great advice! I work at a credit union and we do make government deposits available immediately, but many people don't realize that policies vary drastically between financial institutions. Another tip: if you file very early in tax season, refunds can sometimes take longer to process even after showing as "pending" because the IRS and banks are dealing with high volumes.
What's the best tax strategy for holding private company stock options?
I'm working at a medium-sized tech company that gives employees stock options as part of our compensation package. The company seems to be doing pretty well, and I'm trying to figure out the smartest way to handle these options from a tax perspective. Right now I'm just holding all my stock options personally under my own name. I've been wondering if there might be better ways to structure this for tax advantages. Should I consider putting them in some kind of trust? Would it make sense to gift some options to my kids (they're 11 and 14)? What about setting up an LLC or something similar to hold them? Any other creative approaches I'm not thinking about? I'm not super rich or anything, but these options could be worth something decent if the company keeps growing, and I want to make sure I'm being smart about how I'm handling them. Any advice from people who've dealt with private company stock options before?
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Something nobody's mentioned yet - check if your company has any restrictions on transferring your options to trusts or other entities. I tried to move mine to a family trust and found out our company's option plan specifically prohibited it without board approval. Had to go through this whole exception process. Just a heads up that it might not be entirely your choice depending on your company's stock option plan documents.
That's a really good point I hadn't thought about. Do you know if this restriction is common in most company option plans? I'll have to go back and read the fine print on my grant documents.
In my experience, it's fairly common for private companies to have some transfer restrictions. Most option plans allow transfers to family trusts or estate planning vehicles with notice to the company, but often prohibit transfers to third parties without approval. The reason is that companies want to control who their shareholders are, especially while private. If you're planning to transfer to a trust, review your option agreement and stock option plan carefully. Look for sections titled "Transfer Restrictions" or "Transferability." Sometimes you just need to give written notice to the company, other times you need formal approval from the board or compensation committee.
One strategy I used was exercising a portion of my options early and filing an 83(b) election with the IRS. This lets you pay ordinary income tax on the spread (if any) at exercise rather than when the shares vest, which can be huge if your company's value increases dramatically. You only have 30 days after exercise to file the 83(b) though, so don't miss that deadline! I missed it with my first company and regretted it - would have saved about $30k in taxes if I'd filed properly.
Wait I thought 83(b) elections were only for restricted stock, not options? I'm confused because my accountant told me options aren't eligible for 83(b) since they're already taxed at exercise.
Why are scholarships and grants considered taxable income for student tax filing?
I just found out that my scholarships and grants might be taxable and I'm freaking out a bit. I'm a junior in college and have been receiving both merit scholarships and need-based grants for the past two years. Nobody ever told me I needed to pay taxes on this money! My financial aid package covers tuition, fees, and housing, but there's also a stipend for books and living expenses that gets deposited directly into my bank account (about $4,500 per semester). I've never reported any of this on my taxes because I thought educational money was tax-free. My parents still claim me as a dependent on their taxes if that matters. I'm worried now because I saw something online about scholarships being partially taxable depending on how they're used? Can someone explain why the government would tax money that's meant to help students afford education? And what should I do about the past two years if I was supposed to be reporting this income?
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Something important that nobody's mentioned yet - if your scholarships/grants ARE partially taxable, the school often doesn't withhold any taxes on that amount! This can leave you with a surprise tax bill at filing time if you're not prepared. I learned this the hard way last year when I owed nearly $900 because of my taxable scholarship portion. You might want to consider making estimated tax payments throughout the year to avoid a big bill (and potential penalties) at tax time. Form 1040-ES is what you'd use for that.
Thank you for bringing this up - I hadn't even thought about withholding! Does the school typically report scholarship/grant info to the IRS? Or would they only know if I report it? And how would I even calculate how much I should pay in estimated taxes?
Yes, schools report your scholarship and grant information to the IRS using Form 1098-T, which shows your tuition and related expenses as well as scholarships/grants received. So the IRS does know how much you received, even if you don't report it. This is why people sometimes get letters from the IRS later asking about unreported income. For calculating estimated taxes, you'd need to figure out approximately how much of your scholarship/grant money will be used for non-qualified expenses (the taxable portion), then calculate the tax on that amount based on your tax bracket. The IRS has worksheets in the Form 1040-ES instructions to help with this. Since you're a dependent, your tax situation might be affected by the kiddie tax rules depending on your total income.
I've seen a lot of students just ignore the taxable portion of scholarships and grants, thinking the IRS won't notice because they're students. This is a HUGE mistake! The IRS computer systems automatically flag mismatches between what your school reports on Form 1098-T and what you report on your tax return. It's way better to properly report everything now than deal with an IRS notice, potential penalties, and interest later on. Especially since this could be happening for multiple years in your case, which could add up significantly.
Is there a specific form we need to use for reporting scholarship income? I don't see anything specific about this on the 1040.
Rosie Harper
Has anyone tried FreeTaxUSA Pro? Their commercial version is only like $85 for unlimited federal returns. Not as fancy as Drake or ProSeries but it might be perfect for a student.
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Elliott luviBorBatman
I used FreeTaxUSA Pro last season and it was decent for basic returns. The interface isn't as polished as the big names but it gets the job done. State returns are extra though, like $15 each.
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Demi Hall
Just throwing this out there - make sure you understand the legal implications of preparing taxes for others, even if they're friends and family. Technically, you should register for a PTIN (Preparer Tax Identification Number) from the IRS if you're preparing returns for compensation, even if it's just a small amount.
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Darcy Moore
AuthorGood point! I wasn't planning to charge anything since I'm just getting experience, but I'll look into getting a PTIN anyway to do things properly.
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