College graduates in 2011 who were fortunate enough to find jobs soon face another daunting task. They must file their first tax returns as full-time employees.
Hiring a professional with paid tax preparer training is usually a wise choice for these individuals. Young adults can overlook important deductions that are unfamiliar to them.
Fortunately, the tax burden of a newly employed person is eased by someone armed with the information from a registered tax return preparer study course. For example, when student loan payments consume a large part of a young worker’s budget, the tax benefit is especially important.
Up to $2,500 of student loan interest is deductible without itemizing deductions. For some individuals, this amount is phased out and potentially eliminated. That limitation is based upon a taxpayer’s filing status and a calculation of modified adjusted gross income, which an RTRP can determine.
Actually, even if student loans are paid by a person’s parents, interest on these debts is deducted by the former student. Of course, a tax preparer review course also reveals that this is only possible if parents do not claim a recent college graduate as a dependent.
Another deduction not requiring itemizing that is covered in tax return preparer work is moving expense. College graduates who took initial jobs and then eventually found superior permanent positions 50 miles further from home are entitled to deduct moving costs. They also need to plan for continuing the new employment for 39 weeks of the next 12 months.
Deductible moving expenses include more than payment to moving companies. Packing materials and a truck rental count toward this category. Even simply driving a personal vehicle for a qualified move provides a person with a standard mileage rate deduction of 19 cents per mile for the first half of 2011 and 23.5 cents for the second half.
Young workers who itemize deductions can possibly enjoy another tax advantage. If they search for different jobs in their current field, they can deduct the associated costs. Expenses such as career placement services and travel to interviews are miscellaneous itemized deductions. However, the deduction is limited to the amount of these expenditures that exceeds two percent of adjusted gross income. This only applies to people seeking job advancement. The costs to search for a first job after graduation are not deductible.
Young workers who are questioned by registered tax return preparers about potential deductions at least learn the value of a professional’s expertise. Eventually, these young adults incur more changes in life that cause additional opportunities for a tax practitioner to help apply commonly unknown or misunderstood tax preparation tips.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.