Wednesday, September 14

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Tax Tips for the Unemployed

Tax season may be one of the most financially stressful times of the year. For individuals without a job, everyday financial burdens may be multiplied by an unexpected tax liability. Fortunately, the tax code offers some relief for the unemployed, which may help you reduce or avoid a tax bill.
Both unemployment benefits and severance packages represent taxable income. To help minimize your burden, the government offers tax breaks in several areas of interest for those without a job.

  • Job Search Expenses – Costs associated with your job search can be taken as itemized deductions. Save your receipts for purchases such as resume preparation, phone calls, and even online job seeking expenses. However, these expenses must be related to a job search within your current industry. Politicians looking for work in the pharmaceutical industry are out of luck. Also, these expenses must total at least 2% of your adjusted gross income.
  • Moving Expenses – For individuals relocating to accept a job, you can now write off your moving expenses against your gross income. Several caveats exist, including a requirement that your new place of employment be at least 50 miles from your old residence.
  • Health Insurance – This can be taken as an itemized deduction if payments for health insurance exceed 7.5% of your adjusted gross income. Better yet, if you received any income from self-employed work, your entire health insurance costs can be taken as a direct expense. In addition, unemployed individuals can take funds out of IRAs to pay for these expenses without triggering any penalties. Just note that the distribution may be taxable depending upon your tax bracket.
  • Education – Certain education expenses can be deducted if they either maintain or enhance skills needed in your current field of work. Be careful though, as the IRS does not allow deductions for education required for a job, or that qualifies you for a position in another trade or industry.

-Mike Worthington provides resume-consulting services and FREE resume evaluations for job seekers in all industries at
www.Evaluate Resume also offers specialized job market expertise and content to media and employers. Phone: (802) 865-4243 Fax: (802) 860-2876
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