Are you part of the millions that are unemployed in the United States? Well, if you are collecting unemployment insurance benefits or still receiving your severance package, be prepared to file income tax returns. Despite not having consistent paychecks, any type of income is taxed so you must be prepared. IRS spokesman, Terry Lemons, said “if you have major household changes, say you lost your job in 2011, we encourage people to take a close at things like the earned income [tax] credit.” You may still have to pay taxes, however, there may be more credits and breaks you can receive because of your current unemployment status.
The recession between 2007-2009 brought upon a plethora of unemployment across the U.S. and the backlash is still being felt today. Some have given up searching for jobs, however there are still many constantly inquiring for openings. These people have the opportunity to deduct many of the expenses that go in the job search. For example, any postage sent to a company, long-distance phone calls, hotels and simply anything related to the job search can all be tax deductible. However, to qualify for these deductions, a person must be searching for a job in the same profession or field as their previous work. Additionally, searching for your first job is not tax deductible. One must attain a position within a given profession then lose it in order to receive any tax benefits. Also, remember to always save receipts for any expenses related to the job search, as they will substantiate your claims.
If you are fortunate to obtain a job last year and forced to move 50 miles and over from your former home, you can deduct moving expenses from your returns. This even applies to those who acquired their first job. However, you must work at least 39 weeks in the new location in order to benefit from the credit. Even the cost of lodging on your way to your new home is deductible, although food and beverages are not.
Unemployment is an unfavorable position that can cause distress and frustration among individuals and families. These tax credits offered by the IRS will hopefully relieve some of the stress associated with searching for a job and some of the debt associated with unemployment benefits.