4 tax tips for the unemployed
Are you prepared for unexpected layoffs or unplanned resignation? Anything can happen and more often than not, these things happen on rainy days. How prepared are you comes unemployment period?
If you ever find yourself out of work, it’s understandable if taxes fall the least of your priorities or things to look at. But do keep in mind that it’s important to still keep your taxes and financial management at bay. You see, even unemployment benefits are technically income source so it’s only necessary to file it on your tax report.
Photo by Gabriel Beaudry
Albeit your unemployed hence, your tax status has changed, you still shouldn’t skip this process.
File your tax return
You might forget this one if you’ve ever been unemployed for quite some time. You may think you’re no longer obligated to file for any tax returns since you’re not earning income anymore. However, depending on your age, filing status, and gross income, you most likely would still have to file for one.
Consider the silver lining: if you ever worked for a part of the year and paid off estimated taxes or had taxes withheld while you’re employed, chances are you may be due a refund based on your succeeding decrease in income.
Deduct your job hunt expenses
Job searching is costly. You look and pay for babysitters to watch your kids or leave them off a daycare, you spend dollars on gas and toll fees to go attend a job interview or travel to a career fair, you spend a lot on printing your resume, portfolio, and making copies of your certifications as requirement.
Well, did you know that you can deduct all your job search expenses come tax time? On a more important note, did you keep all your receipts as proof for all the costs related to your job search? This part is vital.
Possible deductions are the travel costs for a job interview as well as your resumé preparation expenses, and agency fees. If ever your job search came to fruition and moving is required, it could also be deducted so long as it meets the time and distance requirements.
Unemployment government benefit programs
Federal, state, and local governments are provided with an enormous amount of money to distribute as benefits annually. From food money to health care plans, there are various government programs that can assist you in your daily expenses. Usually, they would provide food assistance and health insurance as these are basic and necessary needs.
You should go ask your local government office or check out their programs online to get a grasp of what they offer that you may qualify for and apply.
Switch from unemployed to self-employed
If you file your tax report as a self-employed rather than unemployed individual, you can deduct a generous amount of your expenses brought upon by your home office. Basically, you can cash on some additional deductions as self-employed.
This home office should be exclusive to business and regularly used for business purposes only. Once you have established a portion of your home to a home office space, you can then start to deduct a portion of the cost of electricity, internet, rent property taxes, utilities, and the likes. Just keep in mind that you follow the rules of your Labor Department for claiming unemployment insurance.
If you file taxes as self-employed rather than unemployed, you could cash in on some additional deductions. There are a lot more expenses you can deduct as a self-employed taxpayer. Just make sure you follow the Labor Department’s rules for claiming unemployment insurance and you should be fine.
What other tax tips and financial management tips you can share with those out of work? Share it with us!
About Chie Suarez
Chie is a daytime writer for Depreciator – Tax Depreciation Schedule, a company dedicated completely to Tax Depreciation Schedules that aids the Australian property market.