10 Tax Tips for College Graduates

1. Coordinate with Parents- parents may have been claiming their graduate as dependents. This will probably need to change once they enter the workforce.
2. Student Loan Interest- subject to limitations, interest paid on outstanding student loans after graduation is deductible.
3. Continuing Education While Starting Work- Work-related continuing education is no longer deductible as a miscellaneous itemized deduction, but it 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.
4. Retirement Accounts- They should start contributing as much as possible to retirement accounts, from 401(k) plans offered by employers, or IRA or Roth IRA accounts.
5. Health Insurance- In addition to an exclusion for employer-provided health insurance, there are also tax-advantaged health savings accounts and flexible spending accounts to consider.
6. Graduation Gifts- Gifts are not taxable to the recipient, and, unless very large, may not be taxable to the giver either.
7. Side Gigs- Students often have had some experience working side gigs while in school, either as an employee or on their own. They should keep good records of business-related expenses, which can be deducted if they are self-employed. Self-employed graduates may also face the shock of having to pay estimated taxes and self-employment taxes.
8. Moving Expenses-  No longer deductible except for members of the armed forces.
9. Part-Year Withholding- starting a job mid-year can result in over-withholding based on the assumption that the employee earned the same amount for the entire year. Newly employed grads should check with their employer to see if part-year withholding is available.
10. Record-Keeping- Grads should keep a file of tax-related documents, such as expense receipts and tax statements so that they are ready for their tax professional when tax time rolls around.

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