Now that we're in the midst of tax season, there are a number of things job seekers need to consider when it comes to taxes beyond the fact that you can deduct many of the expenses associated with your search.
For example, if you're searching for work in another location, taxes may be an issue. Never put taxes before taking a great job in a field that you love, but please consider tax rates on your income and for the long term. When you relocate, you need to think about income, children, retirement and legacy. The challenge for many of us in financial services is not the tax rates, but the totality of taxes or the type of income we receive or earn.
Tax rates can be tricky and deceiving.
If you buy and sell something for a long term capital gain, you can receive a low rate of 15 percent. If you receive dividends, you may be able to capture a low rate of 15 percent. If you can find bonds that pay tax free, you may also receive a low rate on passive income. If you use a tax deferred vehicle, you can also defer taxes until withdrawal. Examples are 401K, IRA, annuities and such. However, W-2 Income is generally taxed in the most progressive and methodical fashion but there are many variations with regard to moving to a new jurisdiction.
Don't forget that you can avoid state income tax if you live in one of the seven wonderful U.S. states such as: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Forty-one states impose income taxes. New Hampshire and Tennessee apply it only to income from interest and dividends.
Various states exclude Social Security benefits from state income taxes. Twenty-seven states and the District of Columbia have income taxes that provide a full exclusion for Social Security benefits: Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia and Wisconsin.
States are generally prohibited from taxing benefits of U.S. military retirees if they exempt the pensions of state and local government retirees. Various other retirement exemptions apply to the value of property or the type of income. For example, all citizens of some states may have an exemption of the first $50,000 of property value.
Numerous states allow special tax benefits to military retirees. Some states, with conditions, do not tax retired military pay: Alabama, Alaska, Florida, Hawaii, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming. Mississippi, Missouri, Kentucky, Oregon, and North Carolina have conditions that apply.
Many states still have an estate tax on top of the federal estate tax. States that impose an estate tax are: Connecticut, Delaware, District of Columbia, Hawaii, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont and Washington.