People are often hesitant to make decisions about changing jobs. If you've casually thought about it, seriously consider the possible benefits of doing so before the end of the year. Quitting during the current tax year could be beneficial to you or your new employer.
Perhaps you have considered starting your own business. If you go ahead and sever ties with your employer, you may be able to reduce income tax obligations. Becoming self-employed can allow you to deduct a portion of your start-up costs and your business expenses. If you use part of your home for the new business, you may qualify for additional deductions. Furthermore, Kiplinger says that having your own business can provide flexibility to adjust your taxable income. As you approach the end of the year, if you want to reduce your income, you can wait until late December to bill clients, pushing that income into the upcoming year.
Quitting your current job to look for a new one can also help reduce your tax liability. Job-hunting expenses are reported on a Schedule A as part of miscellaneous expenses. But your miscellaneous expenses aren't deductable until they exceed two percent of your adjusted gross income. Quitting your job can help lower that threshold. And, if you get a new job that requires you to move, you may be able to deduct your moving expenses.
New Employer Benefits
Federal and state governments commonly offer tax credits to businesses for hiring certain people, such as disabled veterans, Native Americans and individuals who were recently eligible to receive government benefits. If a spouse or friend has a business and offered you a job, if you fit the criteria for any new-hire credits, accepting the invitation could lower his tax bill.
Quitting Late in the Year
Quitting your current job in the last months of the year will allow you to devote more time to your job search, so you can begin the new year with a fresh start. You won't have to worry about scheduling conflicts for interviews and there may be less competition for available positions. There's a common belief that employers do less hiring during the holidays, so many people stop applying.
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