5 Tips For Filing Taxes After Switching Jobs
Starting a new job can be an exciting time. Training, learning more about the company, making new friends, and getting the hang of the job you were hired to do are all fun and new adventures that will help you to create lasting memories and grow as a person likewise.
Whether you moved across town or across state lines for your new job opportunity, a lot of you will find yourselves worrying about how to file their taxes now that they have the new job and that’s totally understandable.
Although it can be difficult to smoothly transition your taxes from one job to another, these five tips can help you feel at ease and make the move as easy as possible.
1. You Can Deduct The Cost of Your Resumes or Travel Expenses to Get to Interviews
If your job is something you don’t take lightly or something that isn’t the easiest to find, you may get stuck printing out countless resumes, mailing out your applications, and traveling to places out of your area for work.
Although some of these costs might not be large enough to even consider a hassle, there are other times where heading to an entirely different state for an opportunity may arise and, on that note, seeing if you qualify for a write-off can be a great way to get that money back in the long run.
However, if you were reimbursed for these items they can not be written off and, similarly, the reason for your costly job transition can also affect whether or not you qualify for a tax write-off.
2. Unemployment: If You’re Laid Off and Receiving Benefits, You Still Owe Taxes
Some people think that receiving unemployment benefits means you don’t owe taxes but that’s not true. In fact, these benefits count as taxable income under tax law and knowing this can prevent you from winding up with a huge amount of money at the end of the year that you owe for the benefits.
However, if you file form W-4V, you can specify the amount you want to withhold and ensure you are still receiving a large portion of the benefits without the fear of owing the IRS at the end of the year in the process.
3. Don’t Touch Your IRA or 401K
If you had a retirement plan set up at your previous employer, you may be thinking about taking the amount of money you accrued, however, this is the last thing you want to do.
The reason for this is that every dime you remove from your plan will be taxed and, if you are under the age of 55, an additional ten percent early withdrawal tax penalty will be tacked on as well.
Your two best bets are to either leave the money with your previous employer if it is over $5,000 and let it accrue in the tax shelter or transfer it to your new employer’s IRA or 401K plan if it has investment options you like.
This will significantly help you to get the most out of your retirement plan in the future and as you begin to calculate your retirement plan, you will find that you have met your goals accordingly and can begin your golden years as stress free as possible.
4. Claim The Right Allowances on Your Tax Withholding Form
Although the little number may seem like just that, the decision you make actually affects how much tax is withheld from your wages and whether you’ll owe or get a refund at the end of the year. To avoid paying too much or too little, it is best to read over the W-4 of your new employer and, by using the withholding calculator on the IRS website, determine the actual amount of allowances you are entitled to claim.
At the end of the year, keeping this in mind, getting your taxes done right, and taking into account the internal revenue system’s tips to avoid Identity theft are the best ways to ensure that you get the most out of your taxes and steer clear of the stress often involved in filing your taxes.
5. Find Out If You Qualify For Moving Tax Deductions
If the job you decide to take does in fact require you to move, the traveling expenses needed to get to your new location may actually be deductible. However, there are a few caveats involved in these deductions.
If your old home is over fifty miles farther from your new job than your old home was from your old position, then you pass the first of two tests needed to determine whether you qualify for the deduction or not.
Secondly, if you are now an employee at a new location, you must work full time for at least 39 weeks during the first twelve months of employment to qualify. Although this part is one of the two necessary to pass the tests, you can still deduct the costs as long as you pass the distance test as long as you know for a fact that, once the first twelve months is complete, you will pass the time test likewise.
Although you can sometimes feel stressed about filing your taxes correctly at the start of a new job, these tips will help you to start off on the right foot, prepare you for what lies ahead, and allow you to enjoy the excitement involved in new jobs rather than the chaos.
After all, being an adult can be nerve-racking so learning ways to relieve some of that stress is a wonderful way to get back to the things that make you feel young again like making new friends and growing with a group of awesome people that understand what it takes to advance in life.