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
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. Luckily, there are useful tax deductions which may be useful if you are required to relocate to a job 50 or more miles away. The rules are somewhat complicated and you may want to speak to a tax expert to be 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 target college students with on campus promoters, and will keep doing so following graduation. It is more likely you will have extra money, if you avoid opening accounts your whole 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. For more information, 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. Taking the deduction will create preparing your return easier, but you should also consider the advantages of itemizing your return. 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 – 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 schooling it is certain that a new phase in life starts. You may continue with your education or may watch out for a job. There is a component of taxation in all these.