Tax Tips that College Graduates Will Find Useful
Now that college is over and you’ve graduated, it is time to begin living in the world of work and taxes. 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. 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. By way of example, gasoline and hotel costs can be claimed, whilst food cannot.
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. School students are aggressively targeted by credit card firms with on campus promoters, and will continue to do so following graduation. If you avoid opening to many accounts then you will have additional money to ensure your full tax liabilities can be paid by you.
Student Loan Interest
Now is a good time to take advantage of the student loan interest deduction, if you took out any student loans that assisted you pay for college. It enables you to deduct the interest paid on your own loans, which may be quite a chunk of change for several graduates. Once your income reaches an amount of ,000 the deduction does start to phase out. For more information, 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 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 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 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 deduct the value of all items you happen to donate, as long as 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 schooling it is certain that a new phase in life starts. You may continue with your education or may look out for work. There is a component of taxation in all these.