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Tax Preparation 101

Taxday_pulse

Tax Preparation 101

Students at this Texas high school have generated $24 million in tax refunds—and counting. By Kim Greene

Students at University High School in Waco, Texas, have been burning the midnight oil for the past few weeks. They’re not cramming for tests or rehearsing a school musical, though—they’re preparing income tax returns free of charge for residents in their community.  

The students are part of the IRS’s Volunteer Income Tax Assistance (VITA) program designed to help low- and moderate-income taxpayers file their returns. For the past 10 years, University students have completed roughly 15,000 electronic tax returns and generated $24 million in refunds. In 2005, the program’s first year, students filed 329 returns. As of April 8, the students had completed 2,400 returns for the 2014 tax year.

Prepping for Tax Prep

The 82 University students who are part of the tax program this year are all enrolled in the school’s Academy of Business and Finance, according to Angela Reiher, dean of academies at University High School. During their high school careers, the students in this academy take comprehensive classes that sound more like college courses: banking and financial services, income tax accounting, security and investment, and human resource management, to name just a few.

Students learn about tax preparation as early as ninth grade as part of their coursework. On top of that, both students and teachers must pass exams and be certified by the IRS to become official VITA volunteers.

“The students do not only 1040s—a lot of people don’t think the kids can do anything more than that—they do schedule A, schedule B, schedule C, schedule D,” says Reiher. “They have done taxes for foreign exchange students at Baylor [University]. They’ve really gotten well versed in many layers of the income tax code.”

University High School’s tax preparation clinic is open three nights a week beginning in mid-January and running through April 15. “Everyone in this area knows about us,” Reiher says, adding that some clients come from as far as Austin (an hour and a half away) because the cost of gas is cheaper than the cost of tax preparation with companies like Jackson Hewitt and H&R Block.

When clients arrive, freshmen act as greeters and start the interview process with a series of questions. By sophomore year, students typically start preparing simpler tax returns.

“The more experienced they get, the more complicated the returns become,” explains Reiher. “Seniors act as student managers and make sure the [other] students are doing what they’re supposed to. They do the quality control as well.”

The Payoff

Reiher first learned of a similar program at a high school in Florida when she attended a National Academy Foundation conference. (NAF is a network of career-themed academies that expose underserved high schoolers to career opportunities. Reiher's school is one of its 667 members.) She immediately thought a tax program could be a wonderful service to the community. “We knew that, in Waco, there was $3 million to 4 million left on the table that clients in this area could get for earned income tax credit, but they didn’t know about it or how to access it," she says.

Local residents are grateful for the assistance to access that money. Plus, the refunds bolster the local economy because the clients—like many other taxpayers—spend their refunds at nearby businesses. “The return to the community is great,” Reiher notes.

And it’s not just the clients who benefit. The students do, too. “They feel that sense that they’re really helping somebody else,” Reiher says. “Their self-esteem is out the roof.”

Of course, students also learn real-world financial literacy skills in addition to gaining experience that will help them decide on a career path. Many students have graduated from the academy and gone on to work for national accounting firms. Reiher believes it’s because they got their start doing income taxes.

That will likely be the case for current seniors Yanley Duarte and Miguel Jaramillo. Duarte plans to pursue a business degree after high school, while Jaramillo hopes to become an accountant. Both have volunteered at the clinic every night it has been open throughout their four-year high school careers. “That’s how dedicated they are,” says Reiher.

 “When we’re busy, there are nights that kids are here until midnight along with the teachers,” she says. “The last person in is the last person served. We don’t turn anybody away.”

Image: Jamal Wilson/Courtesy of University High School's AJ Moore Academy of Finance

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