Taxes are not just a grown-up thing. Anyone who has earned or unearned income during the year should seriously consider whether they are legally obligated to file taxes. This includes children who are recipients of a trust fund, people who receive social security, along with the average wage worker. So while taxes affect nearly anyone and everyone, why is it that tax benefits seem limited in terms of benefiting the youth? In this post, I will reveal what I believe to be the top 10 tax saving tips for the young professional taxpayer.

 2014 is the first tax year in which taxpayers must report whether they have obtained minimum essential health coverage in accordance to the Affordable Health Care Act.  Despite all of the fuss and complaints, it’s not a complete money drainer.  For those who have obtained qualifying health care coverage from the Health Insurance Marketplace, there is a credit for you!

 The Premium Tax Credit is a refundable tax credit designed to help individuals and families afford health insurance coverage as now required by law. This credit is unique in that it can be paid in advance so that taxpayers do not have to wait until tax season to receive a refund.

 In order to be eligible for this credit, you must buy health insurance through the Marketplace, cannot be eligible for coverage through an employer or government plan, meet the income threshold, generally may not file Married Filing Separately, and cannot be claimed as a dependent by another person.

 All those years you were away at college may finally pay off.  If you moved during the calendar year due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your moving expenses.  The best part about the Moving Deduction is that it directly reduces adjusted gross income, similar to the Student Loan Interest Deduction, meaning that it can benefit you in the long-run by allowing you to claim more itemized deductions in certain cases as well as increase your chances of qualifying for various tax credits which are reliant on adjusted gross income.

There are three main factors that determine whether your moving expenses are deductible. Generally, you can deduct your moving expenses if your move closely relates to the start of work, you meet the distance test (usually at least 50 miles from your old home), and time test.

 Just as how taxes aren’t just for grown-ups, neither are itemized deductions. While a large majority of taxpayers opt to take the standard deduction, you could potentially save a lot of money in taxes if you accumulate expenses worthy of itemization.  There are no income limits or requirements to itemize deductions. Keep in mind that you are entitled to the greater of the standard deduction or itemized deduction when calculating your taxable income.

 For young professionals who do not own a home and, therefore, do not have any mortgage interest or property taxes to pay, this may be difficult. However, there is still a bunch of expenses that count as itemized deductions which can really add up.  This includes medical expenses, charitable contributions, certain job-hunting costs, home office expense, unreimbursed employee business expenses (such as meals and entertainment, travel, mileage, and more), tax preparation fees, investment fees, and so on. With some good tax planning, young professionals can very well itemize their deductions and benefit from some smart tax savings.

 This one might be a no-brainer, but for recent college graduates and people in their early twenties, it might be instinctive to have your parents claim you as a dependent on their tax return.  They’ve been claiming you for as long as you can remember, so why wouldn’t they continue to claim you either as a qualifying child or qualifying relative? Nonetheless, once you begin making a considerable amount of income and are legally required to file your taxes, it may be in your best interest to claim yourself even if you do not provide for over half of your own support.

 There are numerous perks to claiming yourself on your own tax return. You get a higher standard deduction, the personal exemption of 3,950 which directly reduces taxable income, and the door opens to a whole bunch of tax credits you can potentially claim.  While this definitely seems like the good life, it may still be beneficial to file with your parents or whoever supported you during the year in the event that you did not make enough money to get the most out of all these tax savings.  However, that is a tax planning discussion for another day. What’s important is realizing that this is a viable option available to you when filing your taxes.

 The best tax advice anyone can give you is to file honestly and file with integrity. You may be thinking, well isn’t that obvious? But surprisingly, where most people get stumped is during an IRS tax audit. Filing your taxes is the easy part, but substantiating your income and deductions may be a bit more difficult–especially if you are purposely making false claims in hopes of receiving a larger refund.

 If you plan on itemizing deductions or claim moving expenses, then be sure to keep your receipts so that when it comes time for an audit, you are prepared and are not left paying hundreds of dollars in interests and penalties. Especially for taxpayers who are in their twenties, the last thing you need are back-taxes, bad credit, and a levy or lien being placed on your assets. It just isn’t worth it.  I hope you found these tax savings tips to be interesting and insightful. As a young professional, myself, I want to be aware of every tax saving available to me–no matter how little. To learn more about these tax savings deductions and credits and whether you are eligible to claim them, visit the IRS website at or consult a tax professional.tax saving

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