Congratulations! You’ve made it!
School is done and you are ready to start mapping your career. Here are a few tips for you and your parents, to keep your taxes low.
√ Low Rates. Unless you earn more than $46,000 in 2013, you are in the 15% tax bracket (or lower).
√ Don’t Withhold Too Much. Call me so I can help adjust your withholding. While it might be nice to get a refund, why let the IRS hold your money? Withholding tables are based on a full year income. If you only work part of the year, too much will be withheld.
√ Itemize Deductions. Possible, but not likely. You’ll probably use the standardized deduction of $6,100 for 2013. Itemizing helps if your deductions are higher. Did you know you can deduct state tax withheld from pay and gifts to charity? Medical, and job-related expenses, have “floors” – only excess costs count. Job items include professional dues, books, publications, tools, supplies, and materials used in your job. If you have questions… give me a call.
√ Job-Seeking Costs. No help on getting that first job, but once you have a work history and can itemize, costs to find work in the same field is deductible. Keep track of costs associated with your search: cost of resumes, copying, postage, phone calls, travel, etc.
√ Moving Expenses. Deductible – even for that first job. Better yet – you get the deduction up front even if you can’t itemize your deductions. If you have changed jobs, your commute must increase at least 50 miles (compared to previous commute). For the first job – moving is deductible if the job is more than 50 miles from home. That includes costs to move belongings and the travel to the new site. (This includes the cost of packing, storage and insurance.) .
√ Education Costs. Education costs include tuition, fees, books, supplies and that includes computer. Tax law give you two options – adjustments (no need to itemize) and tax credits. Whoever claims your personal exemption will get the benefit. Might be mom & dad for 2013.
And Speaking of Mom & Dad
Can you folks claim you as a dependent?
√ If you are not age 24 at year-end, and were a full-time student for any part of 5 months – the answer is they probably can.
√ If you will be 24 by year-end, your folks can’t claim you if your earnings exceeded $3,900.
The distinction is very important. Both the dependence exemption and the right to claim the education credits or deductions are affected. Call me if you have questions. 619-589-8680. If you want to make an appointment to go over your stuff – this is the best time to do that. Just use this form.