Prep for Post-Grad Life With These 5 Financial And Tax Tips

College graduation is a major milestone to be celebrated. It’s also a time of exciting transitions and possibilities for your future. As you prepare, both mentally and financially, for your shift into the “real world” here are 5 tips to get a jump start on ensuring you’re on your way to meeting your goals.

Take Charge of Your Situation

As soon as you go out on your own and start earning your own money, it’s time to start taking responsibility for your tax obligations. This means filling out a W-4 form and understanding your withholdings, making estimated tax payments if you’re self-employed or working as a contractor, and keeping accurate records of tax-deductible expenses.

And if side hustles or gig work are part of your income picture — think freelancing, driving for a rideshare app, selling on Etsy, tutoring, or anything else you do to earn beyond a regular paycheck — that income is taxable too. When you’re not an employee, taxes aren’t automatically withheld, so you’ll likely need to make quarterly estimated tax payments to avoid a surprise bill at tax time.

Learn more: Do freelancers really pay taxes four times a year?

Open a Tax-Advantaged Savings Account

One of the best things you can do for yourself financially is to open and start contributing to tax-advantaged retirement savings accounts (like a 401(k) or Roth IRA). These accounts serve the dual purpose of helping you prepare for your financial future and helping you save money on your taxes — both now and down the road. If your employer offers a 401(k) match, try to contribute at least enough to get the full match.

Learn more: IRA vs. 401(k): Which should I invest in first?

Take Advantage of Education Tax Benefits

Don’t forget to take advantage of the education tax benefits available to you. Two credits worth knowing about: the American Opportunity Tax Credit, which is for undergraduate tuition and is partially refundable, and the Lifetime Learning Credit, which covers undergraduate, graduate, and professional degree courses — with no limit on the number of years you can claim it. You may have also had qualifying education expenses earlier this year, or may still be incurring them if you’re doing graduate work.

Make sure you enter the information from any 1098-T form you receive — it shows tuition paid during the year. Keep receipts for expenses like tuition and fees, books, supplies, and equipment so you can take full advantage of the education tax credits and deductions available at tax time.

Learn more: Education tax credits and deductions

Don’t Forget the Student Loan Interest Deduction

Once you graduate, you’ll probably be required to start making regular payments on your student loans. Interest on those loans can make up a big portion of those payments, but you might be able to deduct up to $2,500 of that interest when you file your taxes each year.

Your lender will send you a 1098-E form showing the total interest paid over the year if you paid at least $600 in student loan interest during the year.

Learn more: Student loan interest deduction — eligibility, requirements & more

Know Your Health Insurance Options

If you’re still on your parents’ health insurance plan, that’s completely fine — and it doesn’t affect your taxes the way you might think. Under the Affordable Care Act (ACA), you can stay on a parent’s plan until you turn 26, regardless of whether you’re married, where you live, or whether you’re still in school. And here’s something a lot of new grads don’t realize: being on your parents’ plan and being claimed as their dependent are two separate things. Filing your own tax return as an independent will not remove you from their coverage.

If you do have income and had taxes withheld, you’ll want to file your own return — you may be entitled to a refund even if your parents can still claim you as a dependent.

Learn more: I’m still on my parents’ health insurance — does that affect my taxes?

Don’t worry about keeping track of all these rules on your own. TurboTax will ask you simple questions about your life and income — including your W-2, side hustle earnings, student loan interest, and education expenses — and find every credit and deduction you qualify for. Whether you file on your own or work with a TurboTax expert, we’ll make sure you get every dollar you deserve.