6 Important Tax Facts for Millennials

Single dollar bill in front of a white wall, image used for Nicholas Fainlight blog about advice for millennials and taxes

Paying taxes is essential for everyone and it’s something you’ll have to do once you become an adult. However, one of the most uninformed groups on taxes is millennials; they may not be aware of some crucial facts and tips that could help them. Unless parents educate their children, there is no way the youngest generation of adults can learn more about taxes unless they do their own research. Whether to save money or comply with IRS regulations, these tips are designed to help millennials submit a more successful filing at tax time.

  1. Submit before the deadline

This step is crucial to avoid late fees and penalties. File, even if you don’t have the funds to pay. The IRS provides extensions and payment plans to help you square away your debt to the government.

  1. Save on software

If you earn less than $64,000 per year, there’s no need to run out and buy expensive tax preparation software. The IRS provides free software to help you prepare your taxes on your own.

  1. Report your side hustle

First of all, failure to report a side job is risky. If the IRS finds out about it, they may view it as attempted tax evasion. However, there’s an upside to reporting your side job. It means you can also claim deductions for business expenses related to that job, such as the purchase of office equipment.

  1. Don’t forget to claim school expenses

If you attended college in the tax year, you can claim nearly all of your expenses from tuition to textbook purchases. For a more thorough assessment, you may want to seek the advice of a tax professional. He or she can look at a list of all of your educational expenses and determine which ones are permitted as write-offs.

  1. Take advantage of the saver’s credit

This is a program instituted by the IRS to encourage people to begin saving for retirement early. The tax credit is 50%, 20%, or 10% of your retirement contributions up to $2,000. Those percentages increase for up to $4,000 for couples who file jointly.

  1. Deduct your job search expenses

While we all know business expenses are tax deductible, many do not know that expenses incurred through job hunting are equally deductible. Items such as the cost of printing resumes, dry cleaning bills, and fees paid to employment services can all be claimed on your income taxes.

These are just a few tips to give you a leg up on filing your yearly income taxes. If you’re unsure of what you can claim and what you are required to report, the best advice is to seek out the assistance of a trained tax preparer. You may even take a course in tax preparation yourself.

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