Tax tips for the unemployed
Wed, 29 Feb 2012 22:34:25 GMT —
If you were unemployed for all or part of 2011, you still have to file taxes.
"Unemployment benefits are taxable under the federal income tax code and in most states, and it's important to remember that federal income taxes are not automatically withheld from a benefit check. If individuals did not specifically elect to have the taxes deducted, they may owe taxes on the amount received when they file their income tax return," said Joyce Vassillion, with Jackson Hewitt Tax Service in Myrtle Beach.
Jackson Hewitt tax service released these tips Wednesday for the unemployed trying to get the most out of their return:
· Taxable income - Taxable income includes federal unemployment benefits (state benefits vary by state), job severance payments and debt forgiveness.
· Withdrawing retirement funds early - Early withdrawals from your retirement plans are also taxable. If you're under the age of 59.5, you'll also owe a 10 percent penalty for early withdrawals, though there are a few exceptions, such as paying for medical insurance after you lost your job.
· Job search deductions - Expenses directly related to your job search may be tax deductible, including travel expenses for going to interviews, rÃ©sumÃ© paper, printing costs, long-distance calls and faxes, postage, as well as meals and lodging expenses. You will need to choose to itemize on your return to claim these deductions.
· New job deductions - If you were able to find new work in 2011, but the position was more than 50 miles from your old job, you may be able to claim the expenses of moving yourself, your family, your pets and your household goods and personal vehicles. Moving expenses are a direct deduction against income on Form 1040.
· Health insurance deductions - The additional cost of health insurance while unemployed may be claimed as a medical deduction when you itemize deductions. Additionally, if you worked as a contractor or started your own business, you may be able to deduct your health insurance premiums directly on Form 1040.
· Earned Income Tax Credit - Even if you worked for part of the year, your lower income could make you eligible for tax breaks such as the Earned Income Tax Credit, which provides qualifying, eligible individuals and families with low to moderate earned income with up to a $5,751 refundable credit.
A lot of people may need to pay attention to the rules for the unemployed tax payer. In January, South Carolina's unemployment rate was 9.5 percent.
Here's how our counties did: