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. Listed below are a tax tips for you that you will find helpful.
Job Related Relocation
It may be frightening for a new graduate entering the workforce since we all know that the job market is not quite as great as it once was. 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. As an example, gasoline and hotel expenses can be claimed this is not the case for meals.
Avoid Credit Predators
Although this isn’t technically tax guidance, it’s highly recommended 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. 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
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 deduct the interest paid on your own loans, which may be quite a chunk of change for several graduates. This deduction does start to phase out once your income reaches a total 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 choose 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 may want to itemize for maximum savings if you believe that your total number of credits and deductions will exceed your standard deduction. This may seem difficult, but tax professionals – as well as tax prep programs – can certainly inform you if you 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 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 – especially those who majored in technology related discipline – are considering self-employment. Luckily for them, there are scores of tax credits and deductions available on the market for people that are self-employed.
On completing your education, a new stage in your life starts. You may continue with your education or may venture out to get work. However, in all this there is an element of taxation.