Five Financial Steps Following Graduation
- July 1, 2020
- Posted by: CKH Marketing
- Category: Financial Tips
There are many changes following a college graduation. Moving away, finding a new job, the perfect apartment/house, etc. But you shouldn’t have to worry about your taxes. These five financial steps following graduation allow you to understand how you should be filing, mistakes to avoid, and benefits that will help you in the long run.
1. Being claimed as a dependent:
- If you have just graduated, your parents may still be able to claim you as a dependent on their tax return. The main rules for dependency are:
- You must be under 24 by the end of the calendar year
- For at least five months of the year you must have been enrolled as a full-time student (whatever your school deems as full time)
- You must have lived with your parents for more than half of the calendar year (living away from home for school does not disqualify you)
- Your parents must have provided more than half of your financial support for the year
Meeting all of these requirements means that your parents can still claim you as a dependent and receive dependency exemptions and education credits.
2. Continuing education while working:
Work-related continuing education cannot be classified as a miscellaneous deduction. But it can qualify as an exclusion from your income. Especially if it’s part of an employer-provided Educational Assistance Program (EAP).
3. Keeping up with side gigs:
Many students have experience doing side gigs apart from being a student. Whether as a part-time job, club member, or being self-employed, keeping good records of your expenses will be helpful when filing your taxes (as some may be deductible if you are self-employed for example). Being self-employed does have some drawbacks when it comes to having to pay estimated taxes and self-employment taxes.
4. 401(k) and savings account:
You might be financially strapped right out of college, but diverting some of your income into your 401(k) and savings can significantly improve your financial position in the long run. If you employer offers a matching 401(k) contribution, put enough in up-front to receive the employer match. If that amount is too much, consider the traditional 401(k) route.
5. Bring in a professional::
If this is your first time filing solo, you will need some guidance. A CPA (certified public accountant) will help identify tax breaks and keep you up-to-date on changing tax laws. Keeping with the same CPA will also cause less headache next tax season, as they will already know your tax history and be familiar with your financials.
The above article only intends to provide general financial information and is based on open source facts, it is not designed to provide specific advice or recommendations for any individual. It does not give personal tax, financial, or other business and professional advice. Before taking any form of action, you should consult a financial professional who understands your particular situation. CKH Group will not be held liable for any harm / errors / claims arising from the articles. Whilst every effort has been taken to ensure the accuracy of the contents we will not be held accountable for any changes that are beyond our control.