Question about tax deductions?

Hi. This is a pretty basic question, sorry. But I'm 18 and it's the first time I've had to worry about tax returns/extensions. I am not claimed as a dependent by anyone. I know that a deduction doesn't function the same way as a credit. But does a deduction reduce the amount of my income that is taxable, or is it only used to determine which tax bracket you fall into? I am a full time college student, and I received $5000 in 2006 from a small trust fund. Given that the standard deduction is $5150, and the personal exemption is like $3300, I owe nothing, right? Is this true for the California state taxes also? Also, if I don't owe, then I don't need to file, do I? I assume I'm not getting a refund if I never actually paid anything. Could someone let me know if I'm right about all this? I thought I didn't need to file, but then someone told me otherwise, so I'm kind of panicking. I need to do an extension really quick if I was wrong. Thanks!

Don't panic. If you can't be claimed as a dependent, then you don't have to file federal. And you're right, if you didn't pay anything in, you won't get anything back. You didn't need to do an extension - you don't have to file for federal. I'm not sure about CA.

A deduction would reduce the amount of your taxable income.

You are only eligible for the telephone tax credit that someone mentioned if you had a phone with long distance service that you paid for sometime in the period of March 2003 and July 2006.

yes, you are right .. you do not have to file if your income is less than $8000 something (believe $8400) and also if you have not paid any FED tax on it... I'm not quit sure about state tax though.. you might want to check state tax website or form for that

File a return to get your telephone excise tax refund of $30.

You do not need to file a federal tax return. However, you have to file and pay income taxes to California on the $5000 from your trust income.