Taxes may be the last thing on your mind when you're changing jobs, but overlooking their impact could mean missed tax-saving opportunities.
Issues to consider
include:
*
Your
retirement plan. Distributions from retirement plans are generally taxable
and may also be subject to an early withdrawal penalty. The penalty would also
apply to amounts withheld for income taxes. When you leave a company, any
unpaid 401(k) loan is also considered a taxable distribution if you don't repay
the loan according to the terms of your plan.
Planning tip: Have the money in your retirement account transferred
directly into another qualified plan or an IRA. A direct rollover avoids
automatic income tax withholding and income taxes.
*
Job-hunting
expenses. You can deduct the costs of looking for a new job in your present
line of work, even if you don't get the job. Typical expenses include travel to
job interviews, resume costs, and employment agency fees. You must itemize your
deductions, and your total miscellaneous deductions must exceed 2% of your
adjusted gross income.
*
Moving
expenses. If you meet two tests, you can deduct the costs to move your
household and personal effects, including your in-transit travel expenses and
storage expenses.
First, the distance from
your old home to your new workplace must be at least 50 miles farther than the
distance from your old home to your old workplace.
Second, you must work
full time in your new location for at least 39 weeks during the 12 months
following your move. The time test doesn't apply if you're laid off from your
new job or later transferred for your employer's benefit.
*
Residence
sale. You can exclude from taxation up to $250,000 of gain ($500,000 for
joint filers) if you own and occupy a home as your principal residence for at
least two of the five years preceding its sale. If you sell your home due to a
change in employment, you can still exclude part of the gain even though you
don't meet the ownership and use tests.
To discuss the tax issues relating to a job change,
call us at (518) 798-3330. We are here to help.
