For many young professionals, this will be your very first year to file your own taxes. Filing state and federal income tax returns can be a daunting task, but don’t be intimidated by it—instead, plunge in with confidence that you won’t be paying any more than you have to by making sure you take every deduction you’re eligible for. Here are some you may not have thought of when your only income was from a part-time summer job:
Did you take advantage of low interest rates to become a home owner? If so, you can deduct the interest you paid each month last year on your mortgage as well as any home equity line of credit or loan (also called a second mortgage). You can also deduct the property taxes you paid last year.
When filing your federal return, you can deduct the income taxes you paid to your state and local entities. Depending on where you live, you might be able to deduct your car registration fee (a type of local tax) and maybe even sales tax (that could be significant if you bought big-ticket items like furniture, major appliances, or a car).
If you donated your old college trappings so you could outfit your new digs with updated (and matching) furnishings, those donated items are deductible. Cash donations to churches and charities are also deductible. If you volunteer, you may also be able to deduct an amount based on the mileage you drove to do that volunteer work.
Did you go back to school or take certification classes to broaden your skill set? Education expenses are often deductible as long as they relate to your job.
And, finally, if you decided to go it alone and are self-employed, you can deduct expenses for the business use of a portion of your home. This may include a portion of your electric and heating bills as well.
About this Examiner: Kathryn Marion is the award-winning author of GRADS: TAKE CHARGE of Your First Year After College!, the most comprehensive resource for navigating the world of work and independent living after graduation, as well as host of the book’s companion resource site, www.GradsTakeCharge.com. The print edition of GRADS: TAKE CHARGE is available through Amazon and other online booksellers. The e-book edition is available through e-junkie.
Kathryn also coaches students, graduates, and career changers as well as consults with small businesses and aspiring authors.
Follow her other Examiner columns: College to Career and Job Search. And even more articles on SelfGrowth.com.