ON AIR NOW

LISTEN NOW

Weather

cloudy-day
48°
Sunny
H 77° L 49°
  • cloudy-day
    48°
    Current Conditions
    Sunny. H 77° L 49°
  • clear-day
    72°
    Afternoon
    Sunny. H 77° L 49°
  • clear-night
    61°
    Evening
    Clear. H 77° L 49°
LISTEN
PAUSE
ERROR

Krmg news on demand

00:00 | 00:00

LISTEN
PAUSE
ERROR

Krmg traffic on demand

00:00 | 00:00

LISTEN
PAUSE
ERROR

Krmg weather on demand

00:00 | 00:00

The tax implications of changing jobs

There are many factors involved in changing your job, such as adapting to new working conditions, making a new budget, and updating your tax strategy. Whether you are moving to another employer because of a new opportunity or because you were let go from your previous position, changing jobs can have major tax implications — both for the amount of taxes owed in the year you start a new position and for your long-term retirement planning.

When leaving your previous job, keep in mind that any severance pay you receive from your former employer is taxable in the year you receive it, as is any accrued vacation or sick pay you collect upon departure. Unemployment insurance benefits and extended benefits are generally considered taxable income. While applicants for unemployment benefits are offered the option of having income taxes automatically withheld from their unemployment benefits, it’s important to note that a decision not to withhold could mean a large tax bill the following year.

READ: Crisis Button: I'm moving in two weeks but I own my home. Now what?

When you start your new job, you will have the chance to adjust your income tax withholding on Form W-4. This is a major component of your overall tax strategy, since it affects how much tax is withheld from your wages and whether you’ll owe more taxes or get a refund at the end of the tax year. To avoid overpaying or underpaying, take the time to carefully read the instructions for the tax withholding form for your new employer. Using worksheets or the withholding calculator on the IRS website can help you determine more accurately how many allowances you are entitled to claim.

If you had a 401(k) or similar retirement plan with your previous employer, you will have to decide how to handle your savings when changing jobs. Remember that in nearly all cases, cashing in your 401(k) account is the least desirable of your options. Distributions from 401(k)s or IRAs before age 59.5 are usually taxable, and are subject to an early withdrawal penalty of 10 percent. If you are satisfied with your previous employer’s 401(k) plan and have more than $5,000 in your account, you may choose to leave your savings in that plan, where it will continue to grow on a tax-deferred basis.

After investigating your options, you may find that it makes more sense to move your 401(k) balance to your new employer’s 401(k) — assuming the plan accepts rollovers and offers an attractive range of investment choices — or to an IRA. By rolling over your savings from your former employer’s 401(k) plan to an IRA, you may have more freedom to choose your investments. Opportunities for taking penalty-free early distributions may also increase.

READ: Six steps to a great financial plan

For example, you are generally permitted to withdraw money from an IRA penalty free to cover the cost of health insurance premiums if you have been collecting unemployment compensation for at least 12 weeks, or to pay for qualified higher education expenses, or for the purchase of a first home. You may also want to consider rolling over your 401(k) savings into a Roth IRA instead of a traditional IRA. While you will have to pay tax on the amount rolled over into a Roth IRA, all withdrawals in retirement will be tax free.

For another great tax strategy, in some cases, you may also be able to deduct certain expenses incurred while you are out looking for a new job. You are not, however, permitted to deduct these expenses if you were searching for a job in a new occupation, or if there was a long break between the end of your last job and your new search. If you meet the requirements set forth by the IRS, you are permitted to deduct a wide range of job-seeking expenses, including employment agency fees, the cost of preparing and sending out copies of your résumé to prospective employers, and any phone and fax expenses associated with your job search. In some instances, travel expenses related to looking for a job or attending a job interview may also be deducted. However, it’s important to note that these expenses must be claimed as a miscellaneous itemized deduction, and the total of all of your miscellaneous deductions must exceed 2 percent of your adjusted gross income (AGI) before job search expenses become tax-deductible.

READ: Q&A: How can I track my savings goals?

If your new job requires you to relocate, you may be able to deduct some of your moving expenses that are not reimbursed by your employer. You can take advantage of this tax help provided that your new workplace is at least 50 miles from your old job (a.k.a. the distance test), and the new job provides full-time employment for at least 39 weeks over a 12-month period. Deductible moving expenses include the cost of packing and shipping your household goods and personal possessions, as well as insurance and up to 30 days of storage. You can also deduct the cost of traveling to your new home one time, including hotels but not meals. If you use your own car for the move, you may claim the actual expenses for gas and oil, as well as parking and tolls, or you can use the standard mileage rate to calculate your deduction. Note that it is not necessary to itemize to claim this deduction.

Because of the generous capital gains exclusion on selling a primary residence, it is unlikely that you will be subject to federal taxes if you have to sell your home when changing jobs. If you owned and lived in the house you are selling for two out of the 5 years prior the sale, you are generally permitted to exclude up to $250,000 of the capital gain from your taxable income if you’re a single filer ($500,000 of the capital gain if you are married and file jointly). So, even if you rented out your home for a period of time before selling it, the house may still qualify as your primary residence if you lived in it for at least two years out of the 5 years preceding the sale.

Getting a new job can be an exciting and rewarding experience. Make sure you are prepared to make the most of it by taking advantage of the tax help that is available and developing a good tax strategy.

Read More
VIEW COMMENTS

There are no comments yet. Be the first to post your thoughts. or Register.

  • In September of 2016, enough signatures were certified on an initiative petition to put medical marijuana on a ballot in Oklahoma, but so far, Governor Mary Fallin has not designated a date for voters to decide the issue. Members of Oklahomans for Health, an advocacy group which favors State Question 788, aren’t happy with the delay, and have begun a campaign to turn the heat up on the governor’s office. Shawn Jenkins, a spokesman for Oklahomans for Health, spoke with KRMG on Wednesday. “We have started a phone campaign and an email campaign that is currently going, that started this week,” Jenkins said, “specifically requesting that it be put on the ballot - and some people are a little bit more not requesting, but demanding that it be put on the ballot - and not just on the ballot, not in November, because that’s too late. This issue was petitioned in 2016.” But the language of the ballot title became an issue when then state Attorney General Scott Pruitt removed the word “medical” from it, which sparked a court battle which restored it, but delayed the issue long enough to prevent a vote that year. Now 2017 has come and gone, and the governor still hasn’t acted, though she could do so at her discretion. Jenkins, a veteran who served with the 101st Airborne Division, suffers glaucoma and also has a son with a rare disease. When KRMG asked him why he advocates for medical marijuana, he discussed the potential benefits for himself, his family, and his fellow veterans. But first, he talked about his rights. “I first got involved with advocacy for it because of being so conservative in my philosophy, and individual rights, and aspects of freedom and liberty,” he told KRMG. If the governor doesn’t call for an election, the issue will still appear on Oklahoma ballots, but not until November of 2018.
  • On every Thanksgiving, it’s always nice to take some time and think about what you and your family are thankful for in 2017 – but at the same time, we may as well try to figure how Turkey Day is playing in political circles as well. In terms of political news, reporters on Capitol Hill and Washington, D.C. are currently going through an almost never-ending avalanche of stories, erupting daily (or even hourly) in what seems to be a high rate of speed in this new social media atmosphere. Let’s take a look at a few things on this Thanksgiving 2017: 1. Roy Moore – Roy Moore might be thankful for a lot right now, mainly a number of men in high profile positions in the Congress and the news media who have been ensnared in the recent swarm of news about sex. The latest person to hit the news – and take the focus off of Moore – is Rep. Joe Barton (R-TX), who had a nude photo of himself leaked on to social media by a woman he was once in a relationship with, which some say might be ‘revenge porn.’ No matter what the details might be of how this occurred, the Barton story is a reminder of the perfect piece of advice that my father gave as he dropped me off at the U.S. Capitol on my first day of work in 1980, when he told me that ‘They call it the House of Representatives for a reason” – members of Congress are no different from our neighbors and friends. Some are good. Some are bad. Some make bad choices along the way. Roy Moore is thankful for Al Franken, John Conyers, Joe Barton, Charlie Rose, and many others. Their stories keep Moore out of the headlines. So the count for today if I'm not mistaken is two more accusers against Al Franken, one more against John Conyers and a picture of Joe Barton's genitalia splashed across the Internet — Ben Jacobs (@Bencjacobs) November 23, 2017 2. President Donald Trump. – Mr. Trump may be most thankful for political opponents like Hillary Clinton, who continues to be a Trump punching bag on Twitter. While many Inside the Beltway cringe at “Crooked Hillary” tweets, those missives continue to delight the President’s legions of fans, as it helps to keep the 2016 Democratic Presidential nominee in the news. (While Mr. Trump is probably also thankful for sports figures like Lavar Ball, Steph Curry, Richard Sherman, and others, I’ll stick to the political arena.) Over the last year, this President has proven himself to be very adept at verbally smacking people on Twitter – whether you think it’s right or wrong for Mr. Trump to be doing that isn’t the point. The longer that President Trump can keep Hillary Clinton in the news, the better for him, and maybe the better for the Republican Party. Donald Trump is thankful that Hillary Clinton is still around. Crooked Hillary Clinton is the worst (and biggest) loser of all time. She just can’t stop, which is so good for the Republican Party. Hillary, get on with your life and give it another try in three years! — Donald J. Trump (@realDonaldTrump) November 18, 2017 3. Tax lawyers and accountants. – Yes, Republicans say their tax reform plan will make the tax code simpler to deal with, and for some individuals, it would be easier to file your taxes under the plans envisioned in the House and Senate. But before you think that it’s going to change everything, a simple review of Congressional tax plans shows there will be plenty of work for people who need to explain the intricacies of the tax code, like tax lawyers and accountants. You don’t have to go very far into the GOP bills to feel confused about what’s being changed. Tax lawyers and accountants are thankful for the GOP tax reform bill. There will still be plenty of business for them, even if that bill becomes law. 4. Federal workers. All the talk for years from Republicans has been about making deep cuts in the budget of various federal agencies. On the campaign trail, President Trump promised much the same. But this first year of a combination of a GOP House & Senate, and the Trump Administration, produced almost nothing in terms of spending cuts and budget savings. Last week, the White House proposed $44 billion in (generic) budget savings to offset disaster aid for recent hurricanes – except it would come between 2025 and 2027, when Mr. Trump would be long gone from the White House. So, as they enjoy a big turkey dinner, federal workers can say ‘thanks’ that the Republican Congress and the President, as they really haven’t been able to wield a budget axe on the Executive Branch. Mr. Trump said before Thanksgiving that he would push for budget cuts in the next year. On Thanksgiving, President Trump visited a Coast Guard facility in Florida. Back in April, Mr. Trump wanted to cut over a billion from the Coast Guard budget. That didn’t make it through the Congress. Pres Trump to reporters 'Admin. Dept. heads will work next on spending cuts, welfare reform ('very shortly aftr taxes') & infrastructure' — AWPS NEWS llc (@AWPSNews) November 20, 2017 5. Politics at Thanksgiving. A year ago, the recent election of Donald Trump was a prime topic for many families, as a lot of Democratic voters were struggling to come to terms with President Trump’s election. Fast forward to Thanksgiving 2017, and it’s possible that a lot of those same people are still somewhat aggravated about the way things have gone in political circles after Mr. Trump’s first 10 months in office. And that leads me to believe that some of you will have a few things to say at the dinner table about President Trump, good and bad. Some will be saying “thanks” for the President – others, not so much. But it isn’t hard to argue over whether you should talk about politics at the table, eh? If you’re a republican having thanksgiving dinner with your democrat family, as you go around the table saying what you’re thankful for, I highly encourage you to say “the electoral college.” — Lord Single Malt (@Singlemaltfiend) November 22, 2017 My advice: Don't print anything out. Don't bring a chart to dinner. At Thanksgiving tell weird stories about when you were a kid to the kids and funny stories about loved ones no longer with us. Politics aren't that important. — Jonah Goldberg (@JonahNRO) November 23, 2017
  • Just in time for Thanksgiving, more than 100 members of Oklahoma's National Guard arrived at the Broken Arrow Armed Services Reserve Center Wednesday night. KRMG's told the unit had been serving a six-month deployment in the Ukraine as part of a joint, multi-national training group. They also provided training support to Ukrainian forces. The soldiers were thrilled to see their friends and family. “I’ve been waiting for this feeling,” one soldier said.  “I’m proud of everything we did over there, but I’m happy to be home.” More soldiers from the unit are expected to return home over the next couple of weeks. Feel free to thank the soldiers in the comments.  
  • We have a beautiful day ahead of us for Thanksgiving. National Weather Service Meteorologist Bart Haake says we'll see plenty of sun on turkey day. “Skies will be mostly sunny today with highs in the middle 60s,” Haake said.   If you’re heading out shopping Thanksgiving night or just walking off the stuffing, Mother Nature won't be an issue.  NWS is reporting mostly clear skies and a low around 42 degrees.   We're going to see higher than normal temperatures in the Tulsa area for Black Friday. “The highs will be in the low to middle 70s,” Haake said.   That's around 12 degrees above normal for this time of year.
  • If the thought of spending hours in the kitchen on Thursday just doesn’t sound like a good use of your time, what with family all around and the prospect of Black Friday shopping beginning at 7 a.m. that day, there are a variety of restaurants that just may have the answer for you. Several chain restaurants and many local ones are open on Thanksgiving, with options ranging from dining in to carrying out to catering the whole affair. Important note: Not all restaurants listed below will be open on Thanksgiving or offer special deals. Some franchise restaurants of certain chains may be closed. It is important to call the restaurant closest to you to confirm the hours and deals. These restaurants are set to be open on Thanksgiving.