Tax Tips for the 2020 Graduate

Major income tax law changes were put in place in late 2017, other alterations occurred in the latter part of 2019 and in March 2020 (as a response to the COVID-19 pandemic) the Coionavirus Aid, Relief, and Economic Security (CARES) act passed. Since the alterations were so significant, a strong possibility exists that students graduating in 2020 could receive incorrect information about past and current treatment of income and deductions. [...]if the student is a dependent in 2020, this annual deduction would be reported for the first time on the recent grad's 2021 tax return. Since the 2020 graduate may have other types of interest expense (e.g., advance pay from an employer, credit card, personal residence, vehicle loan), it is important that the source and reason for the interest is documented. Moving Expense Reimbursement If the 2020 graduate's employer has a policy that reimburses the individual for "out-of-pocket" costs such as apartment/house hunting trips, temporary living costs and/or the actual costs of moving the graduate to his/ her new work location, such monies are mandated to be included in employee earnings for 2020. Since there will be no withholding applied, such treatment will increase 2020 taxable income and income taxes. Barbara is employed by BoSox Products. Since her job requires out-of-town travel, BoSox Products provides $600/month as a reimbursement allowance.