Money considerations when changing jobs
March/April 2010 Print this Article

As you learned in the accompanying article, you may be able to deduct certain expenses on your tax return when you change jobs. This depends on the amount of deductions you have and your income. However, gaining tax deductions is only one consideration when changing jobs. Here are some others:

Consider cost of living -- A salary of $100,000 will go a lot farther in Iowa than it will in San Francisco, where housing and other costs are comparatively high. Will your new job offer a salary increase in name only or will it improve your standard of living?

Consider next year's tax bill -- If you move out of state for a new job, you may get more than potential tax deductions. You may get benefits that you have to declare as income. For example, you'll owe taxes on a signing bonus and on closing costs your new employer pays on your old home or a new home.

Do the rollover -- Don't give in to temptation and cash in your old 401(k) retirement plan. You will owe income taxes, you may pay a 10% federal tax penalty on the amount if you are under age 59½ and the distribution could be subject to a 20% withholding requirement. Instead, roll it over into an IRA.

FINRA Reference #FR2009-1207-0267/E 01/29/10

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