What Income do the Unemployed have?
If you have received unemployment benefits you may have to pay taxes on those funds. It is taxable on the Federal returns and on most state returns. Also if you received a severance package when you left your job that money is taxable. The IRS also wants to know about other taxable income such as freelance work or odd jobs that you've taken on. And if you took money out of your 401(k)--that's considered income.
Don't Overlook Job-Related Deductions.
Of course you knew that you couldn't make money without the IRS wanting their piece, but did you know that there are some deductions associated with hunting for a new job? You can deduct the following, but be sure to have all of your receipts:
- anything you spend on creating, printing and mailing your resume
- career coach or headhunter expenses
- interview transportation costs such as: bus, taxi, train, plane, parking, tolls and driving mileage (Driving: between Jan. 1, 2008, and June 30, 2008--50.5 cents per mile, between July 1, 2008 and Dec. 31, 2008--58.5 cents per mile.)
- meals and lodging for out of town interviews
- relocation costs that are not reimbursed by the employer (note that the move must be over 50 miles from your previous location)
Not deductible--your time for a job hunt, interview clothing or accessories. Oh, and if your employer pays for your relocation costs--that's considered income, don't forget it.