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News For This Month: Tips

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. Here are a tax tips just for you.

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. However, the rules are complex and you may want to speak to a tax professional to make sure 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. 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 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. 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. 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 might want to itemize for maximum savings if you think that your overall 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.

Charitable Donations

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. 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.

Self-Employment

As compared to other years, this year college graduates – particularly those majoring in a technology related field – have ventured in 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. In all these actions there is an element of taxation included.

Recommended reference: wikipedia reference