Tax Info For New Grads

Spring is here and many students are getting ready to graduate from college. Let me commend all you grads for your outstanding accomplishment. You have laid the foundation for a successful life ahead. As you get ready to land your first job, there are a few things you should know about filing your income taxes. Klipinger.com published a great article a couple years ago, but here’s the most relevant and up to date information:

First, you need to file your taxes. One of the first things to find out is whether your parents qualify to claim you as a dependent or if you can claim your own $3,650 exemption. To find out, answer these questions: Will you be under age 24 at the end of 2010? Were you a full time student for at least five months of the year? Did you live with your parents more than half the year without proving more than half your own support? If the answer is yes, your parents can still claim you as a dependent and that means they get the $3,650 exemption. If you are older or provided more than half your financial support, then the exemption is yours.

What do most college students have in common? Student loans. Once you start claiming your own exemption, you can also start deducting the interest you paid on your student loans. You can deduct up to $2,500 in student loan interest by filing the regular 1040 form. This deduction phases out if you earned more than $60,000 for single filers ($120,000 for joint filers) so talk to a tax professional to be sure you qualify.

If landing your new post-college job means a move you may be able to deduct those expenses. So long as the job makes you move more than 50 miles from your previous home and your new company does not reimburse you for the costs, you should be able to claim the deduction for the costs of a moving van, mileage, and any other normal moving expenses. You don’t have to itemize to claim this deduction, just make sure you keep receipts and records.