If you’re a recent college grad, this may be the first year you’re filing taxes. It’s a major rite of passage in your young-professional life, and it’s your chance to recoup some of the money that’s come out of your paycheck the past year. So as beginner tax filer, and especially a recent college grad, make sure you’re getting the most out of your refund by taking advantage of these commonly overlooked tax deductions for twenty-somethings:
Student loan interest paid (even if your parents are helping you out)
One of the few upsides to starting to pay off your student loans is that you can deduct the interest you’ve paid off. I know for me claiming this deduction meant the difference between a $400 refund and $800 refund this year. Even better? If your parents are helping you pay back your student loans (and they don’t claim you as a dependent), you can deduct up to $2,500 in student-loan interest paid. Technically, since you’re the one liable for the debt, you’re the one that gets to deduct it – not your folks.
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Job hunting costs (doesn’t count for your first job)
Hopefully you’ve been keeping track of your job-search expenses (or can dig around for those receipts), because you can deduct expenses incurred when searching for a new job – things like public transportation costs, cab fares and business cards. One major caveat: you have looking for a new position in the same line of work, and it can’t be for your first job out of college. That said, this deduction may be useful if you lost your job last year and were searching for work or you were stuck at an entry level position after graduation and spent part of the year looking to move up in your field.
Job relocation costs (does count for your first job)
If you decided to pack up after graduation and move to the other side of the country (or at least 50 miles away from where you lived) for your first job, then this deduction is for you. You could qualify for a healthy deduction if, for example, you went to school in Boston and moved to Washington, DC for a full-time job (I did this a few years ago – I don’t recommend the drive down the east coast in a giant UHaul truck). You can deduct money you spend on moving trucks, parking and tolls – even mileage on your car if you could drove it down as part of the move. However, you cannot deduct the pizza you bought for your friends when they were helping you move your dresser out of your old apartment.
As with any tax deduction, be sure to read up in detail to make sure your situation qualifies for these deductions – and that you’ve got the documentation to back them up!