If you’re a millennial, you’ll likely change jobs many times during the course of your career, for reasons both positive and negative. Whenever you make one of those job moves, there are a few tax tips to pay attention to as you transition.
Work life today is way different than even 10 years ago.
Remote workers document their beachside hours on Instagram, conference calls are done over Google Hangouts, and millennials now make up the biggest portion of the workforce. As part of that young workforce, you may be cobbling together work or dealing with rising job churn.
You’re far from alone.
If you’re a millennial, you’ll likely change jobs many times during the course of your career, for reasons both positive and negative. Whenever you make one of those job moves, there are a few financial boxes to tick as you transition. Doing so will help you save money – something we all can appreciate.
Get your ducks in a row early
The best time to get your financial life in hand is during a job move. Maybe you’re throwing off the shackles of the corporate machine and making your way as a freelancer or independent contractor. That might mean more financial foresight on your part, but it also means your tax write-off options open up.
Work from home? Hey, your house is basically your office, and you can deduct some of your living expenses. Need WiFi to do your work? That means your internet bill is a job expense, too. Keep your receipts for everything job-related to see the deductions add up at tax time.
Make working for the man work for you
Maybe you’ve landed an entry-level position at the startup of your dreams, or even a placeholder till something better comes along. Even if your new employer has an accounting department (or even if you’re in the new accounting department), there are a few changes in your personal finances that you’ll want to keep in mind.
When you start with a new employer, your contribution to the Canadian Pension Plan (CPP) and Employment Insurance (EI) resets for the fiscal year. In short, you could end up putting in more to those funds than if you hadn’t changed jobs. Don’t worry, though; you’ll get it back with your taxes. It may just mean a little less cash with your paycheques.
Changing jobs often also means changing locales. If you need to move closer to your new office, some of your moving expenses may be deductible too. Tax software like TurboTax, with free and paid versions, can help you make sure you don’t miss any potential deductions.
Know what your new job gives you, and take advantage
Once you’re in your new job, make sure you understand how your new benefit plan works, what you can claim, how much, and how often. This way, in six months, you’re not left wondering how much a trip to the dentist is going to cost you out of pocket. Does your employer have allowances or saving plans? Do they match contributions? Knowing what you’re entitled to will help you take advantage of those benefits in the long run.
If your previous job had similar benefits set up for you, like retirement savings plans or stock options, you want to understand how to plan for your exit. Some employers require outgoing employees to transfer funds to their own savings plan. Others allow you to stay in the current plan. Remember to give your mailing address to your boss on the way out too; you don’t want to have to hunt down your T4s when you really need them.
Starting a new position can be exciting and refreshing. It can also be terrifying and anxiety-ridden. Make it easy on yourself by being financially conscientious as you start. That way, you can focus on looking like a rockstar in front of your new boss or funding your next solo Caribbean remote work trip – wherever your new career takes you.