When you're unemployed or you've lost your job or suffered a big drop in the income level, you may have a considerably different tax situation from the previous year. Rarely does anyone greet the tax season with a big smile on his face! More often, the arrival of your W2 statement in your mailbox causes a sigh. Now, is it possible to erase the pain of filing your taxes? End of the year is always prime time to start planning to cut down tax bills. Try to manage some time to evaluate your last years return and think how you file your tax differently from last year. And believe me all this you can manage if you start think beforehand and do a proper planning.
Yes, certainly there are a few breaks that the unemployed people may qualify for. When you're financially struggling or unemployed, you may have forced yourself to withdraw money from the Individual Retirement Account (IRA) or maybe you've started working out of home. All these instances may have tax implications later on. Taxes are certainly the last thing that may come to your mind when you're unemployed but if you avoid, you may experience further mess.
If your monthly income drops suddenly, you may qualify for some tax breaks that are applicable for people with higher income. The Earned Income Tax Credit is one such type which is aimed at the families with low incomes and at the working people.
All the medical expenses, including the costs on your health insurance policy that exceed 7.5% of your adjustable gross monthly income are tax-deductible, till you itemize them. Try to collect all medial receipts together to get return tax.
The costs that are related to job search can also be deductible as long as you itemize them instead of taking the standard deduction. The deductible items include printing, travel expenses, resume paper, long distance calls and lodging expenses.
It is very important for you to file your tax returns before hand. In case of any complication, ask a professional for help such as what is best option for charity, cash or goods?
If you qualify as a lower earner you may get help with year end taxes. There are many association such as CPA Societies who offer free clinics to lower income group to get tax information and professional opinion while filing taxes for return.
Thus, if you're unemployed and you're worrying about your taxes, you need not fret as there are ways in which you can control the amount that you should pay to Uncle Sam. Follow the advice mentioned above and live a tension free life as the IRS can give you lots of troubles later on.