If you're unemployed during this recession, several factors may greatly impact your tax liability. For unemployed workers who received unemployment insurance benefits, the IRS will tax all benefits after the first $2400. If taxes were not automatically withdrawn from your unemployment benefits check you could end up being liable for hundreds, if not thousands of dollars in taxes.
Here's what you need to know about reducing your tax liability and/or deferring payment as an unemployed person:
- If you are searching for a job, gather all of your job search related receipts. You may be able to deduct expenses for items such as parking fees, resume services and even long distance phone calls and travel expenses related to searching for work.
- If you owe taxes on your 2009 income, you may be allowed to defer payment if you are unemployed. Unemployed taxpayers are often able to receive what's called "uncollectible status" if they do not earn enough income to pay their taxes or if paying their taxes would jeopardize their basic living standards.
It's important that unemployed taxpayers take the time to consultant a tax accountant who can help them navigate the system.