I’m a Tax Advisor: 3 Tax Tips Gen Z Needs To Know This Season
Written by
Laura Bogart
Edited by
Kristen Mae
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Some rites of passage are more fun than others, like getting your driver’s license, walking across the stage at graduation, or paying for your first adult vacation with friends. Surviving your first tax season as a grown-up isn’t exactly as fun, but it is necessary. As Gen Z comes of age and begins paying taxes as adults, they’re participating in yet another ritual of adulthood.
But that doesn’t mean they shouldn’t grit their teeth and suffer through it — or pay more than they have to. Another rite of passage for taxpayers is learning to navigate tax season strategically and avoid unnecessary costs. GOBankingRates connected with some tax experts who shared essential tax tips every Zoomer should know.
Stay Extra Organized as a Gig Worker
John Adams, CPA, owner of Bridgewater Tax and Financial Consulting and an expert in tax planning and fractional CFO services, acknowledges that many Zoomers have turned to gig work to get by in this economy. While that entrepreneurial spirit is admirable, it also requires extra organization when it comes to tax preparation.
He says that, for gig workers, the key to taxes is staying organized and understanding your tax liabilities. Zoomers should know that unlike traditional employees, gig workers are subject to self-employment taxes and need to prepare accordingly.
“I would say that you should work with a tax professional who understands the tax laws or figure them out before you dive into your gig work,” he said. “I find oftentimes that people work a side hustle and are surprised at the tax consequences when it comes time to file their taxes. Make sure you withhold taxes so you don’t receive a surprise.”
Be Aware of Your Deductions
Zoomers may have heard the term “deduction,” but they might not know how certain deductions apply to them. Armine Alajian, CPA, founder of Alajian Group Inc., wants young taxpayers to take advantage of common deductions less experienced preparers often overlook.
Among these deductions? Student loan interest, retirement contributions, and even tax breaks for energy-efficient home improvements, such as Energy Star-rated windows or appliances. Also, if a Zoomer finds themselves in the position of being a primary caregiver and financial support for a parent, they may also be able to claim their parent as a dependent.
Alajian also wants Zoomers to understand the deductions available to self-employed individuals. “If you have your own business, people often don’t realize you can deduct home office expenses and expenses related to self-employment,” she said. “Often, people mistakenly think they need to be formal corporations to deduct self-employment business expenses. But anything for the business that is reasonable and necessary is generally deductible.”
It’s Okay To Need Help
Zoomers might not be aware of all these deductions and ways to save because they’re overwhelmed by the prospect of filing taxes for the first time. Alajian notes that many new taxpayers miss out on deductions when switching from taking the standard deduction to itemizing because they don’t fully understand what expenses qualify.
Zoomers might be so afraid of being audited, or simply lacking in record-keeping skills, that they leave money on the table. That’s why they shouldn’t be afraid to seek guidance from tax professionals — who aren’t there to judge or scold, but to make the process of preparing and filing your taxes smoother and help them plan for future tax seasons.
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