The Job Change Tax Checklist: 9 Items Everyone Forgets Between Offer and First Paycheck

A job change is a financial event dressed up as a career event. Between the resignation letter and the first new paycheck, nine tax items need decisions — and several have deadlines.

Item 1 — The W-4, done right this time

Your new employer’s payroll knows nothing about your year so far. Two-income households and mid-year switchers routinely end up under-withheld because each employer withholds as if its salary were the whole picture. Use the IRS estimator with both incomes and set line 4c accordingly.

Item 2 — The excess Social Security refund

Each employer withholds Social Security up to the annual wage base independently. Change jobs in a high-earning year and you’ll overpay — the excess comes back as a credit on your return, but only if the return claims it. Software usually catches this; humans reviewing their own W-2s usually don’t.

Item 3 — The old 401(k)

Four options: leave it, roll to the new plan, roll to an IRA, or cash out (don’t — taxes plus penalty). The under-appreciated angle: rolling to an IRA can poison future backdoor Roth contributions via the pro-rata rule, while rolling into the new employer’s 401(k) keeps the backdoor clean. High earners should default to plan-to-plan. And if your old balance includes a loan, it typically comes due at separation — with a rollover-by-tax-deadline escape hatch worth knowing.

Item 4 — Equity compensation deadlines

Unvested RSUs usually die at departure; vested options typically give you a 90-day exercise window — a hard deadline with real money attached, and ISO exercises carry AMT modeling homework. Get the equity plan document before you resign, not after.

Item 5 — ESPP holding periods

Shares from an employee stock purchase plan have qualifying-disposition clocks. Selling on the way out the door may convert favorable treatment into ordinary income. Check the dates before liquidating.

Item 6 — HSA and FSA: opposite rules

Your HSA is yours forever — it moves with you; keep contributing if the new plan is HSA-eligible. Your FSA generally dies at termination (spend it down before your last day), while dependent care FSA elections restart with the new employer.

Item 7 — The severance/vacation payout

Paid as supplemental wages at flat withholding — see the bonus trap: if your bracket runs above the flat rate, that check arrives under-withheld.

Item 8 — The multi-state wrinkle

New employer in a new state — or a shift between office and remote across the NJ/NY line — changes wage sourcing mid-year. Start the day-count log on day one; part-year allocations are built from calendars, not memories.

Item 9 — Deductible odds and ends

Job-search and moving costs are no longer federally deductible for most people — but a new self-employment or consulting stint between jobs opens the business-deduction world, and COBRA premiums may become deductible if you land there. Bridge periods deserve their own quick review.

Run the nine in the first month. The whole list is an evening of work — and skipping it is how job changes turn into April surprises.

Romanchuk CPA LLC is a fully virtual CPA firm serving individuals and business owners nationwide since 2014, with NJ/NY depth. Book a consultation at rfg.tax.

This article is general information, not tax advice for your specific situation. Figures adjust annually — verify current amounts.