Tax Deductions – Student loans
Tax deductions for young adults
Many young adults struggle to make ends meet their first few years after graduating college. Some may be making an entry-level salary and trying to carry the costs of rent, auto payments and student loans on top of their day-to-day expenses. So when filing season rolls around, it’s important for young taxpayers to take advantage of credits and deductions that may ease their tax burden.
Student loans can take a chunk out of a young adult’s income, but some may not be aware that they can deduct the interest on their payments, even if their student debt is being paid by their parents. As long as individuals are not being claimed as a dependent on their parent’s taxes, they can deduct up to $2,500 in student loan interest without itemizing their taxes.
Switching jobs or looking for a new position in the same industry in which you are currently working? You may deduct some of the expenses associated with the employment search. For example, these costs include postage, phone calls made to potential employers, career placement services, resume printing and any travel, food and lodging expenses associated with interviewing for a position. However, in order to deduct these costs, the overall costs must exceed 2 percent of the taxpayer’s adjusted gross income and must be itemized as miscellaneous expenses on their tax forms. Keep in mind however that job hunting expenses for adults looking for their first position are not deductible.
Relocating to take a new position? You may be able to deduct the moving costs from their taxes, easing some of the financial burden associated with hiring movers, buying packaging and boxes and traveling long distances. During the first half of 2011, that is January 1 through June 30, the standard mileage rate that movers can deduct is 19 cents per mile. This amount increases to 23.5 cents during the second half of the year. To qualify, a taxpayer’s new workplace must be at least 50 miles further from their old home than their previous office was from their former home. In addition, employees must work at least 39 weeks during the first 12 months of their arrival to qualify. This gets complicated contact us to review your situation.
These deductions can be helpful in lowering your tax liability, but there are rules and restrictions that may apply to each. For this reason, individuals may benefit from enlisting the assistance of a tax preparer in order to make sure they fall in line with the eligibility rules.
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Every effort has been taken to provide the most accurate tax information. Please use your discretion before making any decisions based on internet searches. This page is not intended to be a substitute for seeking a professional tax adviser.
Tags: deductions, early career, first job, student loans
