Economists always point out that jobs are a lagging indicator. Essentially, that means that employers tend to wait until they are convinced that the economy has recovered before they start hiring.
Unfortunately for folks out of work, it looks like it could be a while before companies are confident enough to add to their payrolls.
While being out of a job is bad enough, unemployed folks also need to be aware of possible tax implications.
Yes, it's true. Taxes don't stop even when your paychecks do. So that's why today's Weekly Tax Tip focuses on the tax considerations of the unemployed.
The bad news is that unemployment compensation is taxable. All of it. That exclusion amount from a couple of years ago is gone.
But since your income has dropped, you also might qualify for the earned income tax credit.
You also need to think carefully about tapping retirement accounts to make ends meet. There generally are tax costs there.
Job-hunting expenses, however, might be deductible.
And if you decide to start your own business, there are a variety of small business tax breaks you can claim.
Related posts:
- Jobs, no jobs and taxes
- Tax concerns of the unemployed
- The no-jobs tax problem
- Tax breaks for minimum wage workers
- Weekly Tax Tips 2011
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