Short List of Tax Considerations for College Grads
The graduating class of 2019 is now prepared for a profession, but perhaps not so well prepared for the tax changes that lie ahead for them as they enter the workforce. Here is a short list of some tax issues that might impact your new journey to your job.
- Once you enter the workforce, your parents may no longer be able to claim you as a dependent.
- Got a side gig? If you are simultaneously self employed, be sure to keep good records of business related expenses which can be deducted. All sources of income earned from side gigs are still taxable. Remember you may have to pay estimated taxes and self-employment taxes.
- Starting a job in the middle of the year means it is more important than ever to double check your withholding because your income will be changing.
- If you move to a new state mid-year, you will have to file a part-year state return for each state you lived in during 2019, assuming the states collect income tax.
- Don’t forget when signing up for healthcare benefits to speak with your employer about tax-advantaged health savings accounts and flexible spending accounts
- Sign up for the 401(k) or other offered retirement plan as soon as you are eligible.
- Check with your Fuoco Group professional about the tax breaks for tuition, fees and other college expenses you or your parents were getting while you were in school. Under certain circumstances they can continue for interest paid on outstanding student loans after graduation. You can still qualify for the tax break if the loan is in your name but your parents make the payments — though if you want the deduction, they can’t claim an exemption for you on their tax return.
- Work-related continuing education may still qualify for exclusion from income if it’s part of an employer-provided educational assistance program. The Lifetime Learning Credit may also be available for graduate school or other post-college training.
- Remember to write thank you notes to Grandma or Grandpa for those graduation checks! Unless very large amounts, those gifts are not taxable to the giver or receiver. For 2019, the annual exclusion is $15,000.
- Last but not least – if your search for a position continues after graduation and you are offered an “Internship,” by a perspective employer, please remember that unpaid internships must have educational value, and be of benefit to the intern. The DOL actually has a list of criteria that must be met by a “for”-profit business to be able to classify a worker as an unpaid intern rather than an employee entitled to a paycheck. If you are doing actual work that benefits the company – you must be paid for that work.
CONTACT US: Think of having an accountant like hiring your own personal finance bodyguard. Building a relationship with a professional advisor goes a long way towards safeguarding your financial future and developing good financial habits. Not everyone has the time or temperament to keep up to date on tax law or tax planning opportunities to keep more $$$ in their pocket. We’re here and happy to help at this important milestone in your life. Call us toll free at 561-855-2727, as you take those important first steps after graduation.
