Tax Tips For College Graduates
Now that college is over and you’ve graduated, it is time to begin living in the world of work and taxes. Here are some of the essential tax tips 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. 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. However, the rules are complex and you may want to speak to a tax professional to make sure your expenses do qualify. By way of example, gasoline and hotel costs can be claimed, whilst food cannot.
Avoid Credit Predators
While this isn’t technically tax guidance, it’s a good idea to beware of lenders that prey on college grads. Credit card companies will keep doing so after graduation, even after they target graduate students with on campus promoters. 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. Once your income reaches an amount of ,000 the deduction does start to phase out. 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. If you’re a married grad, you can take the deduction of $10,900, and also $ 8,000 can be claimed by 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. This might seem hard, but most tax professionals – and even tax preparation programs – can easily tell you not or if you would be benefited by choosing the standard deduction.
The charitable contributions deduction can be helpful to college graduates while any taxpayer can claim this credit. If you had to downsize to relocate for a new job, or contributed lots of your books that are older, then be sure to keep track of the items you donate. It is your choice to deduct the value of all items you happen to donate, provided you itemize your return and carry 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, a new stage in your life starts. You may continue with your education or may watch out for a job. In all these actions there is an element of taxation included.