There is no doubt that people are suffering from the poor economy. Unemployment has been its highest in a long time. The number is actually higher because the numbers now only include people who “are actively looking for a job.”
Given the hard times, there are questions and answers about jobs related to federal and state taxes. There is a list of important questions below:
What if I lose my job?
Job loss may create new tax issues for you and your family. If you receive severance pay after your job, this amount is taxable. Unfortunately, payments for vacation time and sick time are also subject to taxes. To ensure a big payment after filing taxes, you should ensure that an adequate amount of taxes are withheld from your income. You can talk to your employer about this. A helpful IRS publication is Publication 4128, Tax Impact of Job Loss.
What if my income declines?
Although the short term decrease ay cause more struggles, there are tax benefits depending on certain income. You may be eligible with some credits and deductions with a lower income. The Earned Income Tax Credit is helpful for working families and individuals. Qualifications depend on your income and family size.
What if I receive unemployment compensation?
Unemployment compensation is considered taxable income. If you receive unemployment compensation, you should receive a From 1099-G that shows the amount you received and any tax that was withheld. Rhodes-Murphy can provide great assistance that makes filing this form very easy.
What if I am searching for a new job?
It’s expensive to look for a new job. Costs include travel, entertainment, new clothes, and office supplies. You may be able to deduct these expenses while searching for that new job. If you do find a job, moving costs for the new job at least 50 miles away from your home may also be deductible For more information, see Publication 529, Miscellaneous Deductions.