Federal Income Tax Tips for the Class of 2002

Students graduating this year will find the tax laws ease some of their post-graduation expenses. Here is a run-down published by CNNMoney of laws likely to affect the class of 2002:

  • Student loans. You can get a higher starting salary and still qualify to write off up to $2,500 in interest paid on college loans this year. Beginning in 2002, a new law extends the deduction to single individuals with adjusted gross incomes between $50,000 and $65,000 and married couples with $100,000 to $130,000 on joint returns. This deduction can be claimed regardless of whether you itemize deductions. But keep in mind you can deduct the interest only if the loan was used strictly for college expenses, is in your name and you can't be claimed as a dependent on your parents' return.

  • Moving expenses. Save your receipts if your new employer doesn't reimburse all your relocation expenses. Some of the costs may be eligible for the moving deduction. As with the student loan deduction, the moving deduction can be claimed regardless of whether you itemize deductions. But keep in mind only a few basic moving expenses qualify for the deduction. These include the cost of shipping your personal possessions, transportation to your new location and lodging en route.

  • Withholding. When you start your new job, you may be stunned by the amount of tax taken out of your paycheck. Because of the way the withholding tables are designed, new grads who start jobs in the middle of the year can end up having far more tax taken out of their paychecks than their salary levels would normally dictate. This is because the tax tables assume that whatever amount you're being paid each week is a salary you'll earn all year long. If, like most June grads, you'll earn your salary for only about half the tax year, you can find yourself in a higher tax bracket for purposes of withholding this year than you'll actually be taxed at next tax season. There are several ways to cope: You can wait for a big refund in 2003. You can adjust the withholdings on your Form W-4. Or you can ask your employer to use the "part year" method.

Good luck to all.

-Rosemary Schlank

You may like these other stories...

Hertz and Icahn make peaceThere won’t be any nasty, protracted proxy battle between Hertz Global Holdings and activist investor Carl Icahn. The rental car chain agreed last Thursday to give Icahn – who has...
For bitcoin users, the taxman cometh. And you best know how to calculate taxes owed on what the IRS calls convertible virtual currency.In March 2014, the IRS issued Notice 2014-21, which declares virtual currency will be...
Majority of House of Representatives urges leadership to preserve cash method of accounting for tax purposesA bipartisan majority of the House of Representatives – 233 members – has signed a letter urging House...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.