Now that school is over and you’ve graduated, it’s time to dive into the world of work and taxation. Here are a tax tips just for you.
Job Related Relocation
Everyone understands that the job market is not as good as it once was, and this can be frightening for a new graduate entering the workforce. Fortunately, there are tax deductions that may be helpful if you must relocate to some job 50 or more miles away. The rules are somewhat complicated and you may want to speak to a tax expert to be sure your expenses do qualify. While food can’t be claimed by way of example, hotel and gas costs can.
Avoid Credit Predators
While this cannot be entirely be mentioned as a tax tip, it is a good idea to beware of creditors that prey on college grads. Credit card companies will keep doing so after graduation, even after they target graduate students with on campus promoters. It is more likely you will have extra money, if you avoid opening accounts your whole tax liabilities can be paid by you.
Student Loan Interest
If you took out any student loans that will help you pay for college then you can now take advantage of the student loan interest deduction. It enables you to subtract the interest paid on your own loans, which may be a chunk of change to many graduates. This deduction does start to phase out when your income reaches a yearly amount of $65,000. To find out more, check out page 28 of the IRS publication.
Standard Deduction vs Itemizing
Most college graduates will want to take the deduction of $5,450. You can take the joint deduction of $ 10,900 if you’re a graduate who is married, and also $ 8,000 can be claimed by a heads of the family. You should also look at the advantages of itemizing your return, although taking the normal deduction will allow preparing your yield to be quite easier. Then you might want to itemize for maximum savings if you think that your overall number of credits and deductions will exceed your standard deduction. On face value this might come out as rather hard, but tax professionals – as well as tax preparation programs – can inform you if one would be benefited by taking the standard deduction or not.
While any taxpayer can claim this credit, the charitable contributions deduction can be especially useful to many college graduates. If you had to downsize to relocate for a new job, or donated a lot of your books that are older, then be sure to keep track of all the items that you donate. You can subtract the value of all items you donate and have evidence of your donation.
This year more than ever, college graduates – particularly those majoring in a technology related field – are thinking about self-employment. Luckily for them, there are dozens of deductions and tax credits available on the market for self-employed individuals.
On completing your education starts a new leaf in life. You may continue with your education or may look out for work. In all these actions there is an element of taxation included.