5 Tax Facts for Young Professionals/Recent Grads

#5 – Do It Yourself!

Depending on when you filed your return for 2013 you have probably had your tax refund for a couple weeks now or if you filed by paper you are probably just receiving it in the mail. Us at Againstiflow thought it would be a good idea to write up 5 tax reminders to remember for next year. A lot of money changes hands between the government and its citizens from February to the middle of April each year and we figured maybe this would help you keep a little extra in your pocket.

1. Student Loan Interest

Student loans are at an all-time high nationwide. The only good news about student loans is that Uncle Sam has setup tax savings out there to motivate recent loan recipients to pay down their debt. If you have any student loans you can write off up to $2,500 a year on the interest you have paid. In a perfect world people with student loans should pay them off ASAP to maximize the yearly tax benefit they receive and to eliminate their debt faster.

2. Moving Expenses

I know, as a college graduate, I told myself that I would go wherever a job took me. Good news! Uncle Sam has setup tax benefits for people who move and don’t get reimbursed for their relocating expenses. To deduct these expenses on your tax return your new job has to be more than 50 miles away from your old home and you have to work full-time for 39 weeks during the 12 months following your move.

Expenses you can deduct following your move:

• Mileage for driving your car to the new location
• Packing materials
• Rent cost and gas for moving truck
• Lodging

3. 401k Credits- Saver’s Credit

It is never too early to start planning for your future and your retirement. Why not now? If you haven’t started, START NOW!!! If you are single and make less than $29,500 in a year you are eligible for the Saver’s Credit.

4. Paid Tuition – American Opportunity Tax Credit and Lifetime Learning Credit

The American Opportunity Tax Credit is perfect for students who are going to school part time and trying to finish their bachelor’s degree. The credit is for students that are not taking a full load of class and are in the first four years of their education. Students who are eligible may qualify for the maximum credit of $2,500. The Lifetime Learning Credit can amount to $2,000 in tax savings. The Lifetime Learning Credit has no limitations. It can be used to pay any tuition no matter the field of study.  It can be used towards graduate school tuition or if you want to just take a class for fun.

5. Do it yourself!

At minimum filing your own tax return online will save you $200. I get it, I know it can be intimidating and you want to be sure that you get the maximum refund, but that is what the software is designed to do. The software walks you through everything and simplifies the process by asking yes or no questions to cover EVERYTHING. Not only will you save money by completing your return, but it will give you the opportunity to learn about future tax savings. DO IT YOURSELF!!!