Do you know when to quit a job? Should you do it before an MBA or after you get one? Is there really a good time to leave your job before the new tax year? If you have such questions running through your mind, you need to find the correct answers before deciding what to do.
Quitting your job before the new tax year has certain benefits, from strategic reduction of your tax liability to freeing up time to travel or spend more time with family during the holidays. Also, if you're relocating for a new job at the beginning of the year, timing your resignation before the new tax year gives you time to tie up loose ends before you start your new life in January.
Get a Fresh Start
The beginning of the year might signify a new chapter in your life, especially if you're going into a new field and are looking forward to a fresh start. Quitting your job before the new tax year begins might be what you need to feel great about starting a new job in January. Plus, if you accrue vacation time with a new employer on a calendar-year basis, you don't have to worry about pro-rating your paid time off allowance like you would if you started a new job later in the year.
Reduce Your Taxable Income
For many of us, Jan. 1 marks the beginning of a new tax year, with the caveat that the IRS permits deposits into individual retirement accounts until the following year's tax day that can be claimed as the preceding year contribution.
However, quitting your job before the next tax year could be part of your strategy to reduce your taxable income. Provided you don't end up in a bind by cutting off your regular salary to minimize your tax liability, resigning from your job before the end of the calendar year can reduce the amount of income you earned for the year, thereby possibly reducing your taxable income for the year.
Read More: Who Must File Income Taxes?
Take Your Bonus Payment
Many employers use retention tactics that essentially require employees to stay until the first day of the New Year to receive their year-end bonus payments. However, many don't, and when bonuses are distributed in November or December, some companies anticipate losing employees before the new tax year begins.
If you don't oppose the take-the-money-and-run scenario or if you feel your bonus was well-deserved and you were going to quit anyway, quitting before the new tax year could be part of your transition into a new job with a new company.
Read More: Do I Have to Pay Taxes on My Bonus?
Benefit From Job Search Season
Interestingly, some career coaches advise job seekers to take advantage of holiday party networking opportunities and the benevolent nature of recruiters and hiring managers during this time of the year. As long as you express genuine interest in seeking employment with certain companies and aren't simply looking for a new job during the holidays because you think decision-makers will be nicer or sympathetic, don't turn down invitations to network with people in your field, even if it's primarily a social gathering.
Also, competition for jobs might be less steep if you're looking for a job in the off-season when many job seekers don't see the benefit of a year-end search.
Benefit From Company Budgets
Once departmental and staffing budgets are finalized during the last quarter of the year, recruiters and hiring managers can feel more confident about extending offers to candidates when they're certain they can afford staff.
Quitting your job before the end of the year to join a new organization when the new tax year begins can make for a smooth transition to your new job. Also, knowing your new employer has budgeted the salary for at least a year can give you the confidence that you chose the right employer.
This article was written by PocketSense staff. If you have any questions, please reach out to us on our contact us page.