5 Things You Need to Know About Taxes in Your Twenties

Very often people don’t learn much about taxes until their twenties. This is usually because most people don’t get their first “career job” until they reach their twenties. Here are five things you should understand about taxes during this critical decade.RefundCheck

1. Refunds Don’t Necessarily Indicate Financial Intelligence

One thing that you will often hear on social media is a lot of people receiving tax refunds. Many of these people may spend refunds on things such as cars and other luxury items. A refund actually means that they overpaid the government and received the money back later, without interest. Invest your extra monthly in something that will pay interest.

2. Keep Track of Receipts

If you purchase a computer that you use for work, or if you have office supplies that come out of your own pocket, this is money which can be written off. Keep up with your receipts for proof during tax season and be sure to take advantage of the write-offs.

3. Write-Off Your Retirement Investment

Money which is invested in your retirement account up until the month of April of the year you file is something which can be written off. Invest in retirement to save on taxes and to save for old age.

4. All Income Counts

If you did a job that was under $600 and you didn’t receive a 1099, you will still need to claim the income. Remember to claim all income to save yourself from an audit later.

5. Keep Money on Hand

Keeping money on hand for your taxes if you owe will save you from having to use a credit card, and starting a cycle of being unprepared.  Save money for your taxes in the event that you owe, then fork it all over at once to avoid fees.

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About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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