Tax Deductions for New Grads
Has Tax Day snuck up on you? If you havenít started your taxes by now, it might have done just that. If youíre a recent graduate may not have had reason to do your own taxes in the past, being a dependent of your parents. Now though, out on your own, you can experience taxes in their full glory. Being a recent graduate has some tax perks, though. If youíre about to file, or if youíre about to graduate and youíre doing research for next year, here are a few potential deductions to keep in mind.
Student Loan Interest
The majority of people who attend college today come out with some kind of student loan debt. While the debt isnít fun, the interest paid on those debts can be deducted from your taxes. Your loan provider will give you a copy of a Form 1040 or 1040A stating the amount of interest paid through the year.
Taking a first job away from home? Your moving expenses are deductible, if youíre moving a distance away from where youíre living. The same holds true if you change jobs and have to move as a result. Keep track of mileage, the cost of and gas for a moving truck, and even packing materials.
Contributions to Retirement Plans
It is (and we canít emphasize this enough) NEVER TOO EARLY to start contributing to a retirement plan. Even if itís your first job out of college, you should be putting money back for retirement. Plus, contributing to a 401k or an IRA can actually lower your taxable income.
In some lines of work, youíll be traveling a lot. Most of these jobs will reimburse you for any necessary costs incurred while youíre on the road, but some donít. In that case, you can deduct business travel costs to reduce your taxable income. Keep in mind though: this is only if you arenít already reimbursed or given a company card.
Job Hunting Costs
If youíre still in college, you canít deduct any costs incurred from hunting for a job. If you already have a job, however, you can. This isnít to encourage you to look for new employment as a tax deduction; rather, this is something to keep in mind if youíre already job hunting. Keep in mind, though, that in order to deduct these costs they have to exceed 2% of your adjusted gross income. Keep track of phone calls, resume printing costs, and any employment agency fees you might incur.