Tax Tips that College Graduates Will Find Useful
Now that college is over and you have graduated, it’s time to jump to the world of work and taxation. Listed below are a tax tips for you that you will find helpful.
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 isn’t technically tax guidance, it’s a good idea to beware of lenders that prey on college grads. Credit card companies target college students with on campus promoters, and will keep doing 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 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 once your income reaches a total of $65,000. For more information, 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 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 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 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 – especially those who majored in technology related discipline – are considering 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 venture out to get work. However, in all this there is an element of taxation.