Essential Tax Tips For College Graduates
Now that school is over and you’ve graduated, it’s time to dive into the world of work and taxation. Here are some of the essential tax tips for you.
Job Related Relocation
Everybody understands that the job market isn’t quite as good as it once was, and this may be frightening for a new graduate entering the work force. The good thing is that there are useful tax deductions that will be very helpful if you must relocate for a job that is 50 or more miles away. On the other hand, the rules are somewhat complex and you might need the services of a tax professional to be sure that 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 target college students with on campus promoters, and will keep doing so following graduation. Then you’ll have extra money, if you stay away from opening countless accounts your entire tax liabilities can be paid by you.
Student Loan Interest
You can now benefit from the student loan interest deduction, if you took out any student loans that will help you cover college fees. 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 are going to settle for the deduction of ,450. You can take the deduction of $ 10,900 if you’re a married graduate, along with $ 8,000 can be claimed by a heads of family. You should also look at the advantages of itemizing your return, although taking the normal deduction will make preparing your returns substantially more easy. Then you may seek the option of itemize for maximum savings if you believe that your number of deductions and credits 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. Fortunately for them, there are dozens of deductions and tax credits out there for people that are self-employed.
On completing your education starts a new leaf in life. You may continue with your education or may watch out for a job. In all these actions there is an element of taxation included.