7 Tax Concerns Unique to Millennials, According to a CPA
Millennials are in a unique financial position, to say the least. They’re fretting over their mortgages and their children’s education while also keeping an eye on elder care expenses for their parents — not to mention their own retirement. These concerns even trickle down to their taxes (because of course they do).
However, if millennials are known for anything — other than their love of Portlandia and avocado toast — it’s for being a scrappy, resourceful generation. Once they know what to look out for, they can plan ahead.
To help millennials understand the tax concerns most relevant to their generation, MoneyLion spoke with Kevin Golden, CPA and partner at James Moore & Co.
“Many [millennials] are advancing in their careers, buying homes, building businesses, investing and starting families,” he said. “But from a tax standpoint, this generation sits at a unique intersection of opportunity and complexity.”
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1. Managing Multiple Income Streams
Millennials don’t just know how to whip up a mean latte or quote Britney Spears songs verbatim; they’ve also mastered the side hustle.
More millennials are stretching their income beyond traditional W-2 employment, earning money through side gigs, rental properties, investments and online or digital revenue streams. That’s not a bad thing. But it does create tax complexities.
“Each type of income is taxed differently. Self-employment income, for example, brings additional payroll tax considerations,” Golden said. “Investment income may be subject to capital gains treatment. Rental income carries its own rules around depreciation and passive activity limitations.”
He added that the more diversified your income becomes, the more important proactive tax planning is. Filing once a year — without a smart strategy — can lead to missed deductions or unexpected tax liabilities.
2. Student Loans and Education Planning
Student loan debt continues to plague millennials. It doesn’t just factor into everyday financial decisions; it also affects taxes. Golden says to be mindful of a few factors:
Student loan interest deductions
Income-driven repayment implications
Employer student loan repayment benefits
Education credits for continuing education
“Changes in income can also affect eligibility for certain relief or forgiveness programs,” he said. “Coordinating income strategy with repayment planning is something many taxpayers overlook.”
Because many millennials are balancing career growth with repayment plans, even modest income increases can shift eligibility thresholds and tax outcomes.
3. Homeownership and Real Estate Decisions
Millennials have come a long way from hanging Dawson’s Creek posters in their adolescent bedrooms — now those posters are tastefully framed in their first homes. As more millennials enter the housing market, Golden says they often assume homeownership automatically comes with major tax savings. Unfortunately, that isn’t always the case.
“With the higher standard deduction introduced in recent years, many taxpayers no longer itemize. Mortgage interest and property tax deductions may not create the benefit they once did,” he said. “On the other hand, those investing in rental property need to understand depreciation, cost segregation opportunities and passive loss rules.”
He’s clear that real estate can still be a powerful wealth-building tool — but it must be structured properly to maximize tax efficiency.
4. Remote Work and Multi-State Tax Issues
Many millennials remember landlines and spotty internet access. Thank goodness things have changed — though memories of their parents hollering at them to get off the computer so someone else could make a phone call may have helped shape a digitally forward generation.
This tendency to stay plugged in has helped millennials embrace remote work, which Golden says can lead them to live in one state while working in another — adding another layer of tax considerations. Another issue: Some millennials relocate without properly updating their tax withholding or residency status.
“This creates potential multi-state filing requirements and residency complications,” he said. “If state tax filings are handled incorrectly, it can result in duplicate taxation or delayed refunds. Reviewing state residency status annually has become increasingly important.”
5. Retirement Planning
Though retirement isn’t immediately on the horizon for millennials, they should be planning for it. As Golden explains, many face a key decision: Should they focus on traditional retirement accounts or Roth accounts?
“Because many are still in growing income brackets, Roth contributions can be especially valuable. Paying tax now at a lower rate in exchange for tax-free withdrawals later can be a strong long-term strategy,” he said. “At the same time, higher earners may benefit more from current-year deductions available through traditional retirement contributions.”
He’s clear this isn’t “a one-size-fits-all decision.” You need to evaluate your current income, projected future earnings and long-term financial goals before choosing a strategy.
6. Starting Businesses and Entity Structure
Despite the old stereotype of millennials as latte-sipping lazybones, they’re industrious. Golden sees more millennials embracing entrepreneurship and starting businesses. Unfortunately, some are so eager to begin that they don’t fully understand the tax implications of their entity selection.
“Operating as a sole proprietor may be simple, but it can result in higher self-employment taxes. Forming an S corporation or partnership may offer planning opportunities — but only if structured correctly,” he said. “Entity decisions affect liability, payroll, distributions and long-term tax exposure. Making that decision thoughtfully at the beginning can prevent costly restructuring later.”
7. Building Wealth While Managing Risk
Golden praises millennials as active investors who rely on online platforms to trade stocks, ETFs and digital assets. They also need to build those investing habits into their tax planning.
“Frequent trading can generate short-term capital gains taxed at ordinary income rates,” he said. “Cryptocurrency transactions may trigger reporting obligations even if no cash changes hands.”
Investing activities should go hand in hand with broader tax planning, he says — especially as portfolios grow and transactions become more complex.
The Bottom Line
Millennials have busy, complicated lives and finances. Their tax concerns reflect that. But with proper planning and insight, they can navigate these complexities and position themselves for long-term financial success.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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