The Bureau of Labor Statistics released new jobless numbers on March 5, 2010 showing a loss of 36,000 jobs in the month of February with an unemployment rate of 9.7%.
Unfortunately, people who were unemployed in 2009 still have to file their taxes for 2009.
The California Society of CPAs is the nation’s largest professional, non-profit state association representing more than 34,000 CPAs in the area of tax, audit, accounting and consulting services such as personal finance.
CPAs are standing by to answer other tax or personal finance questions you may have on this or other personal finance topics.
CPAs suggest the following strategies:
CPA Strategy 1: You can exclude up to $2,400 of unemployment compensation from your 2009 gross income. This break has expired for 2010.
CPA Strategy 2: You can avoid a “penalty tax” on IRA and 401(k) withdrawals if the withdrawal covers (but doesn’t exceed) deductible medical expenses whether or not you actually take an itemized deduction for the expenses. (If you’re receiving Trade Readjustment Allowances under the Trade Adjustment Assistance program and similar programs, you may be eligible for an even better deal, the Health Care Tax Credit, which can pay up to 80 percent of your premiums.)
CPA Strategy 3: You can avoid the penalty tax on 401(k) and IRA withdrawals by establishing a payment schedule of regular equal withdrawals over your lifetime or the joint lives of you and your beneficiary. There’s also no penalty if you take a distribution from your 401(k) when you separate from service at age 55 or older.
CPA Strategy 4: If you itemize, you can deduct job-hunting expenses as a “miscellaneous itemized deduction,” to the extent that all your miscellaneous itemized deductions exceed 2 percent of your adjusted gross income. Job-hunting expenses can include: resume printing costs; postage; long-distance calls and faxes; travel expenses, including air, taxi and rail as well as mileage and tolls; and lodging expenses for out-of-town interviews.
CPA Strategy 5: If you find a new job and move, you may be able to deduct moving expenses. To qualify, the new job must be at least 50 miles further from your old home than your old job was from your old home. This is an “above the line” deduction, available whether you itemize or not.
For more information, check out IRS Publication 4128, Tax Impact of Job Loss (. pdf ), Publication 521, Moving Expenses (. pdf ) and Publication 575, Pension and Annuity Income (. pdf ).
For additional research:
Check out the California Society of CPAs’ free Web site on this and other personal finance topics to better survive the recession and provide a sense of comfort and support. Make sure to check out the “Dollar & Sense Program.”
