Products & Pricing
Online products
CD/download products
Mobile products
Self-employment taxes
Small business taxes
Compare products
TurboTax Advantage
Previous years' products
File an IRS extension
Access my downloads
Tools & Tips
Tax calculators
Tax tips & videos
Track my donations
TurboTax blog
After You File
Track my refund
Check my e-file status
Print my return
Amend my return
Access prior year returns
Go to Turbo
TurboTax Support
Frequently Asked Questions
Expert Services
How TurboTax works
Tax Reform

Getting Your First Job

Updated for Tax Year 2018


Welcome to the real world! Now that you're earning money, use these tips to trim your tax bill.

Start work, start paying taxes

Now that you've entered the workforce, you'll enjoy getting steady paychecks and so will your partner: Uncle Sam.

Becoming a wage earner also means becoming a taxpayer. You'll owe federal income taxes at rates that range between 10 percent (on up to $9,525 of taxable income in 2018 if you're single) to 37 percent (for amounts over $500,000).

In addition, Social Security and Medicare taxes will claim 6.2 percent of your first $128,400 of salary in 2018. The 1.45 percent portion of the tax that pays for Medicare continues no matter how high your wages. You will also pay state income taxes, how much depends on where you live. But paying taxes isn’t just a one-way street. There are also ways starting a new job can also help you save on taxes.

Job-hunting and moving expenses (for tax years prior to 2018)

Unfortunately, you can't deduct the cost of looking for your first job. However, for tax years prior to 2018, when you change jobs, moving expenses and expenses such as the cost of printing resumes and traveling to job interviews is deductible.

Job search costs are "miscellaneous expenses," which means they are deductible, if you itemize, to the extent they exceed 2 percent of your Adjusted Gross Income (AGI) and as long as you're looking for a job in the same line of work.

You can deduct the cost of job-related moving expenses even if it's for your first job and even if you claim the standard deduction rather than itemizing. The key is that your new job must be at least 50 miles away from your former home.  In addition to the cost of moving your household goods, if you drive your own car you can write off 17 cents per mile if you moved in 2017.

For tax years after 2017, moving costs are no longer deductible except for qualified moves related to military service while miscellaneous expenses are no longer deductible for anyone.

Get withholding right

This is something most workers—whether on their first job or 20th—fail to do. We know that because about 100 million taxpayers get tax refunds every year, proof positive they had too much withheld from their pay.

When you start a job, you'll be asked to fill out a Form W-4. That little piece of paper controls how much federal income tax will be taken out of each check to pay taxes. The amount is based on your salary and the number of "allowances" you claim on the W-4. Take the time to read the instructions carefully to be sure you claim as many allowances as possible. That will keep withholding down to the legal minimum.

If you're starting a job in mid-year (as college grads often do), consider asking your boss to use the "part-year method" for figuring withholding for the rest of the year. This method basically sets withholding based on how much you'll actually earn rather than on 12 times your monthly salary. That can put more money in your paycheck when you're starting out (when you can probably really use the dough).

Sign up for a 401(k)

If your company offers a 401(k) retirement savings plan, don't hesitate to join. And don’t be surprised if your company automatically enrolls you. More and more employers are doing it in an effort to get American workers to save for retirement from their first day on the job.

Many firms match part of an employee's contributions, typically 50 cents on the dollar for the first 6 percent of pay, although these days some companies are contributing less due to the recession. Contribute at least enough to capture the full company match; otherwise, you're leaving free money on the table. If you join a traditional 401(k), pre-tax salary goes into the plan. If you're in the 25 percent tax bracket, that means your take home pay will drop by just $750 for each $1,000 you contribute to the plan. If your firm matches 50 percent, that means you'll have $1,500 in the plan for an out-of-pocket cost of just $750. Where else can you get a guaranteed 100 percent return on your investment?

If your company offers the Roth 401(k), you may be better off choosing this option. With the Roth 401 (k), after-tax money goes into the plan, so a $1,000 contribution really costs $1,000. The advantage? As with a Roth IRA, all withdrawals from the Roth 401(k) can be tax-free in retirement, while payouts from the traditional 401(k) are fully-taxable. You’ll benefit from decades of tax-free growth and tax-free withdrawals.

Depending on your income, contributions to a 401(k) might earn you a special tax credit as well. You can qualify for this credit on your 2018 return if your income is under $31,500 if you're single, or under $63,000 if you file jointly with your spouse. The retirement saver's credit is worth up to $1,000 for qualifying taxpayers (up to $2,000 if filing jointly) based on claiming a 10% to 50% credit on up to $2,000 that you put in a retirement plan. The credit, which reduces your tax bill dollar-for-dollar, is in addition to other tax savings that may apply to retirement plan contributions.

Take advantage of a flexible spending account

Be aggressive if your employer offers a medical reimbursement account—sometimes called a flexible spending account or FSA. These plans let you divert part of your salary to an account which you then tap to pay medical bills.

The advantage? You avoid both income and Social Security tax on money you contribute to the account. Paying medical bills with pre-tax money can save you 20 percent to 35 percent or more compared with spending after-tax money.

If you're paying for child care while you work, also take advantage of a child care reimbursement account if your company offers one. It works the same way as the medical plan, allowing you to use up to $5,000 of tax-free money to pay for child care. If you're in the 25 percent bracket, to have $5,000 left after taxes you'd have to earn more than $7,400.

Enjoy tax-free fringes

Fringe benefits often deliver double benefits. Not only does your employer foot all or part of the cost, but the value of most of these benefits comes to you tax-free. Even when the value is included in your taxable income, you come out ahead. If you're in the 25 percent bracket, for example, paying tax on the value of a $1,000 fringe benefit costs you just $250, while you'd have to earn $1,333 in order to have $1,000 left to pay for the item if you bought it with after-tax dollars.

Among the tax-free fringes you may be offered:

  • Pre-tax contributions for medical insurance premiums
  • Group term life insurance
  • Free parking, up to $260 in 2018
  • Transit passes, up to $260 a month in 2018
  • Company car—the value of business use can be tax-free; the value of personal use is taxable
  • Employee discounts on your company's goods and services
  • Adoption benefits

Stock options

The chance to buy company stock at a discount can be a great benefit. But the tax rules are extremely complex and different rules apply to different kinds of options. For Incentive Stock Options (ISOs), for example, no tax is due under the regular tax rules in the year you exercise the options to buy stock.

But if you're hit by the Alternative Minimum Tax (and exercising ISOs might make you a candidate), tax is due on the difference between what you pay for the stock and its value at the time you acquire it. No tax is due when you are granted nonqualified stock options, but when you exercise the options to buy stock, you are taxed under the regular tax rules on the difference between the purchase price and the stock's value. If options are part of your employment package, make sure you understand the tax ins-and-outs so you get the most out of what's offered.

Health Savings Account (HSA)

HSAs are a relatively new form of medical plan that is being offered by more and more employers. They combine a high, out-of-pocket deductible insurance plan with a tax-free savings account. If you choose such a plan, your employer can make tax-free deposits to your HSA account and you can withdraw money tax-free to pay your unreimbursed medical bills.

TurboTax makes it easy to understand your taxes and tax situation when you get your first job.

A TurboTax solution for every situation

See which tax prep product is right for you

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Security is built into everything we do
* Important Offer Details and Disclosures

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. $0 federal (for simple tax returns) + $0 state + $0 to file offer only available with TurboTax Free Edition; offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Self-Employed Offer with TurboTax Self-Employed and TurboTax Live for Extension Filers: To receive your complimentary subscription to QuickBooks Self-Employed through 4/30/20, you must pay for your 2018 TurboTax Self-Employed or TurboTax Live return by 4/15/19 and sign-in and access your QuickBooks Self-Employed account via mobile app or at at least twice by 7/15/19. You will have the option of renewing your QuickBooks Self-Employed subscription by 4/30/20 for another year at the then-current subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section. See for price comparison. Offer not valid for existing QuickBooks Self-Employed subscribers already on a payment plan.
  • Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2018. Actual results will vary based on your tax situation.
  • Anytime, anywhere: Internet access required; standard data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • TurboTax Live Reviews: Displayed reviews are for the TurboTax Live standalone service from Tax Year 2017 and not for the new Turbo Tax product / TurboTax Live bundle available for Tax Year 2018.
  • Pay for TurboTax out of your federal refund: A $39.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Help and Support: Access to a TurboTax specialist is included with TurboTax Deluxe, Premier, Self-Employed and TurboTax Live; not included with Free Edition (but is available as an upgrade). TurboTax specialists are available to provide general customer help and support using the TurboTax product. SmartLook on-screen help is available on a PC, laptop or the TurboTax mobile app. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Advice, Expert Review and TurboTax Live: Access to tax advice and Expert Review (the ability to have a Tax Expert review and/or sign your tax return) is included with TurboTax Live or as an upgrade from another version, and available through December 31, 2019. These services are provided only by credentialed CPAs, EAs or tax attorneys. Some tax topics or situations may not be included as part of this service, which shall be determined in the tax expert’s sole discretion. In the event your return is reviewed by a tax expert and requires a significant level of tax advice or actual preparation, the tax expert may be required to sign your return as the preparer at which point they will assume primary responsibility for the preparation of your return (payment by the federal refund not available when tax expert signs your return). On-screen help is available on a desktop, laptop or the TurboTax mobile app. Unlimited access to TurboTax Live CPAs and EAs refers to an unlimited quantity of contacts available to each customer, but does not refer to hours of operation or service coverage. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Return Access, Smart Insights and My Docs features: Included with TurboTax Deluxe, Premier, Self-Employed, TurboTax Live or with PLUS benefits. Access to all tax-related documents we have on file for you is available through 10/31/2020. Terms and conditions may vary and are subject to change without notice.
  • Easy Online Amend: Included with TurboTax Deluxe, Premier, Self-Employed, TurboTax Live or with PLUS benefits. Make changes to your 2018 tax return online for up to 3 years after it has been filed and accepted by the IRS through 10/31/2021. Terms and conditions may vary and are subject to change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2017 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • #1 rated online tax prep provider: Based on independent comparison of the best online tax software by January 29, 2018.
  • Get tips from Turbo based on your tax and credit data to help get you to where you want to be: Tax and credit data accessed upon your consent.

  • 100% Accurate Calculations Guarantee: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we’ll pay you the penalty and interest.
  • Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Online Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid.
  • 100% Accurate Expert Approved Guarantee: If you pay an IRS or state penalty (or interest) because of an error that a TurboTax CPA, EA, or Tax Attorney made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, we'll pay you the penalty and interest.
  • Audit Support Guarantee: If you received an audit letter based on your 2018 TurboTax return and are not satisfied with how we responded to your inquiry, we’ll refund the applicable TurboTax federal 1040 and/or state purchase price you paid. TurboTax Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. We will not represent you or provide legal advice. Excludes TurboTax Business.
  • TurboTax Free Guarantee: $0 Federal + $0 State + $0 To File offer is available for simple tax returns with TurboTax Free Edition. A simple tax return is Form 1040 only, with no attached schedules.
  • Satisfaction Guaranteed:
    • If you use TurboTax Online or Mobile:
      Satisfaction Guaranteed — or you don't pay. You may use TurboTax Online without charge up to the point you decide to print or electronically file your tax return. Printing or electronically filing your return reflects your satisfaction with TurboTax Online, at which time you will be required to pay or register for the product.
    • If you bought or downloaded TurboTax from a retailer:
      Try TurboTax software. If you're not satisfied, return it to Intuit within 60 days of purchase with your dated receipt for a full refund.
    • If you bought or downloaded TurboTax directly from us:
      Try TurboTax software. If you're not satisfied, return it within 60 days of shipment with your dated receipt for a full refund (excluding shipping & handling).

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: A $39.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2017 TurboTax products.
  • Data Import: Imports financial data from participating companies; may require a free Intuit online account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2016 and higher) and QuickBooks Desktop (2014 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.
Online Software Products
CD/Download Products
Mobile Tax Apps
Help and Support
Tax Tools and Tips
More Products from Intuit