I think it's a good idea to have a thread that outlines the most effective ways to reduce 2012 taxable income for recent grads.
I only have the general and most common ideas here, but I was hoping maybe people could chime in with their "not-so-well-known" deductions.
Here are some of the most common deductions:
- Student loan interest deduction: you should receive form 1098-E from your student loan servicing firm
- Moving expenses deduction for when you move to a new place for your first gig out of school. For more info on what you can claim: http://www.irs.gov/publications/p521/ar02.html
- Charitable donations (I doubt many recent grads have to worry about this)
- Business travel deductions: for when your employer doesn't pay you back
- Lifetime Learning Credit: you can claim the credit for any post-secondary classes you take; you don't have to be working towards a degree. Some limitations do exist though. If you earn too much income during the year, you may not be eligible to claim the credit. At the end of the year, your educational institution should send you a Form 1098-T that reports your eligible costs. To claim the credit, enter those figures on Form 8863
Hope this list helps you maximize your tax returns this year.