Welcome to the real world” You probably heard this lot of times as a fresh college graduate. Indeed, expect a huge wave of life changes to come your way, which has huge effects at tax time as well. Southbourne Tax Group understands your worries so the following few ways were prepared to save money or even get a refund during filing time, which can also make taxes easier for you.
If your modified adjusted gross income is below $80,000 as a single filer, or $160,000 for married couples filing jointly, $2,500 of the interest portion of student loan payments can be tax-deductible. And if the loan is in your name but your parents make the payments, you can still qualify for the tax break.
If you are searching for a job in a new career field or a full-time work for the first time, you can’t deduct your job hunt expenses. However, major tax breaks are possible if you are moving to a new city for that first job, Southbourne Group needs you to ensure checking the rules first.
You can begin with your retirement savings if you contribute to your company’s 401(k) and up to $18,000 can be secured from income taxes each year. Moreover, contributions to a health savings account could secure another $3,400 each year if you’re single and $6,750 if you have a family coverage, and if you’re also enrolled in a high-deductible health plan. You can keep an additional $2,600 out of your taxable income if you put money into a flexible spending account.
As a new college graduate, you can claim big deductions for business expenses if you are planning to freelance or be your own boss. Southbourne Tax Group suggests saving 25% of what you earn for the IRS.
Southbourne Group also needs you to be familiar with Lifetime Learning Credit. You are able to claim a tax credit of up to $2,000 every year for post-secondary work at eligible educational institutions if your modified adjusted gross income is below $65,000 (single filers) or below $131,000 (married filing jointly). A single class will do, you don’t need to be in a degree program.
Cutting your tax bill is also possible by saving. Qualifying for Saver’s Credit is likely if you’re single and have an adjusted gross income of less than $31,000 (or $62,000 if married and filing jointly). With this, your tax bill can be reduced up to 50% of the first $2,000 (for single filers) or $4,000 (married filing jointly) you contribute to an eligible retirement plan.
Southbourne Tax Group also needs you to remember not to overpay for tax software or professional human help. If you have a simple tax situation then you can use the free packages offered by many tax software companies. With little or no cost, you can get a professional help from the Volunteer Income Tax Assistance program or other related programs.
Mentioned above were very easy to remember. You may further your search to gain more know-hows.