contribution, Deductions

Congratulations Graduates! Welcome to Your New Tax Bracket.

May 15, 2014 - contribution, Deductions

I remember my first graduation. We all thought it was the end, the end of the school year. We didn’t understand it was only the beginning. A new chapter in our lives was about to commence. Was it high school, trade school or college that you have completed? What is your next step? Why do you have to weave TAXES into every aspect of life? Because lets face it, taxes do impact every aspect of our lives. Maybe you are beginning a new career. Do you already have a job lined up? Will you be looking for your first job? Will you be moving to a new area? A new city? A new state? Will there be a deduction for you? When you are looking for a NEW job in a NEW trade or business, there is NO deductible job-seeking expense. Even if you get a new job, you cannot deduct any of your job-seeking expenses. When you look for a new job in your present line of work, your expenses may be deductible on Schedule A as Miscellaneous Itemized Deductions. What kind of deductible expenses might you have when looking for work?

• Fees paid to employment agencies and executive recruiters
• Cost of typing, printing and mailing resumes
• Cost of assembling portfolios of work
• Transportation costs to job interviews
• Newspapers and business publications bought for employment ads
• Out-of-town travel expenses, including meals, lodging, local transportation as long as the main reason for your trip is to look for a new job.
• If you travel for personal reasons, none of the travel expenses are deducible, but out-of-pocket job hunting expenses at your destination are still deductible.

To protect your deductions, keep a log of your activities. Keep a calendar of who you interviewed with, on what dates and any follow-up phone calls you made. Do you want to claim the expenses of buying and caring for uniforms or special clothing? They must:

• Be required as a condition of employment AND
• NOT be adaptable to everyday, general wear

What kind of clothing qualifies as a deductible?

• Uniforms of professional athletes, firefighters, police, nurses, jockeys
• Special shoes, shirts, ties, hats with  a company logo or other clothing designed strictly for the workplace
• Protective clothing such as safety boots, safety glasses, hard hats and safety gloves
• Special theatrical clothing if not suitable for everyday general wear

So when I said congratulations graduate, welcome to your new tax bracket, it was all true. I hope you have great prospects for your future. I hope your education will allow you to make a great future and more money than before. Your tax brackets are determined by your marital status and how much money you make. The lowest tax bracket in 2014 is 10%. The highest tax bracket in 2014 is 39.6%. There are a lot of factors to consider and calculations to be made before your bottom line tax liability is known. The more money you make, the higher your tax bracket may be. I wish for you and for all of my clients, that you pay your lowest legal tax. But I also say, “I hope you have to pay a lot of tax. Because that means you will have made a LOT of money.” 🙂