Will the Government Pay for Re-education?

Ever wonder if a different degree might land you a better job? That's what my friend Cindy was thinking about. She’s unemployed and thought about studying something in computers and getting a good paying job. The person in the financial aid office told her that she was prime candidate for government grants. Now Cindy was getting excited. She saw her future as promising.

In May the Pell Grant program was extended to the unemployed to help workers gain education that would make them more employable. It’s a rather sweet deal that can provide up to $5,350 for educational costs at community colleges, colleges and universities, and many trade and technical schools.

The grant is need-based is need-based and depends on the total income of your family. But for many unemployed it’s probably not so hard to meet the need requirement. Other criteria are that you must (1) not being in default on a federal student loan, (2) having a high school diploma, General Education Development (GED) equivalency or otherwise demonstrate your ability to benefit from the education or training offered, (3) be a U.S. citizen or eligible non-citizen and (4) Pell Grants are not available to students who have already received a bachelor's degree.

Number 4 is what got my friend. She not only has a bachelor’s degree, she has a master’s degree. Yet, she can’t afford to back to school. Even a low-interest student loan, which she could get, is not something she wants to think about. Taking on more debt is a frightening prospect.

The program doesn’t work for some other people that I know either. Again, they are over educated and unemployed. But I’m sure that there are many other people out there who could benefit from the Pell Grant program. To apply for a Pell Grant or other student financial aid go to FAFSA.

Even the unemployed must file taxes

If your among the many people who were out of work in 2008 make note that you're not off the hook for filing taxes. The IRS requires anyone who received a W2 from their employer and made at least $8,950 (if you're single and under 65 years old), or made at least $400 if you're self employed, to file a tax return. Hey, it could be in your favor to file. Without filing you can't receive a refund.

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.