Job hunting tax breaks for the unemployed and employed.Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!
Money Girl
160 MG Six Tax Tips for Job Seekers
Hey, Fidelity. How can I remember to invest every month? With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs. Oh, that sounds easier than I thought. You got this. Yeah, I do. Now, where did I put my keys? You will find them. Where you left them. Investing involves risk, including risk of loss. Fidelity brokerage services LLC member NYSE SIPC. This episode is brought to you by AARP. Ten years from today, Lisa Schneider will trade in her office job to become the leader of a pack of dogs as the owner of her own dog rescue. That is a second act made possible by the reskilling courses Lisa's taking now with AARP to help make sure her income lives as long as she does. And she can finally run with the big dogs and the small dogs who just think they're big dogs. That's why the younger you are, the more you need AARP. Learn more at aarp.org/skills. Hi everyone and welcome back to Money Girls Quick and Dirty Tips for Richard Life. I'm Laura Adams. With the unemployment rate currently at 10%, it's likely that you or a friend or family member may be looking for work. This week's post is about tax breaks related to being unemployed or hunting for a new job. Now, let's get back to the topic and see if you can take advantage of any of the following six tax tips. Tip number one, a portion of unemployment compensation is tax-free. Normally, unemployment benefits are taxable income, but there's a brand new benefit that makes the first $2400 of unemployment that you received in 2009 tax-free. For example, if you received $3,000 in unemployment, you'll only be taxed on $600 of it. The benefit applies to each taxpayer, so if you're married and file a joint return, you can each exclude the first $2400 of your unemployment from tax. This break is only for 2009. Benefits you receive in 2010 are fully taxable again, unless the law changes. However, you can choose to have income tax withheld from unemployment payments. That way, you won't be surprised by a year in tax liability. Tip number two, some of your job search expenses may be tax deductible. Today's job market is one of the most competitive in history. You'll probably need to spend some money to create a top-notch resume or even get some career counseling. The money you spend on your job search can add up, but the good news is that many of your expenses may qualify for a tax deduction, which can lower the amount of tax you have to pay. The rule is that you can deduct certain expenses when you're looking for a job in a similar trade or business, even if you don't find one. But note that in order to qualify for this deduction, you can't be searching for your very first job, nor can you deduct any expense that you're reimbursed for by an employer or anyone else. Here are some common tax deductible expenses related to doing a job search, employment agency or headhunting fees, expenses for creating and mailing your resume, professional services such as resume development and job counseling, local and long distance telephone calls to prospective employers, mileage driven to and from job interviews, the 2009 rate for business use of a vehicle was 55 cents per mile, travel expenses such as airfare, car rental and hotel for a trip that's primarily to look for a new job or to interview for one, passport fees for an interview outside of the country, classified ad expenses, membership fees for job search websites, travel expenses to find new residents before relocating, and moving expenses when you relocate for a new job. You'll find more information about which expenses are tax deductible and IRS publication 529. And of course, all the links to the tax forms I mentioned will be on the blog at moneygirl.quickanddirtytips.com. Tip number three, get a tax credit for education. If you haven't taken a class or training program in your field in the last few years, consider how that could help you land a job. You might even find an online program that would make it possible to brush up on your skills from the comfort of your own home. The American Opportunity Tax Credit allows you to receive up to $2,500 for the cost of qualified tuition and related expenses for higher education. Expenses for books, supplies, coursework materials, or a computer, for example, in 2009 and 2010 are eligible. The credit is 40% refundable, which means that even if you don't owe any tax, you can still get a portion of your credit as a tax refund. You claim the American Opportunity Tax Credit by submitting IRS Form 8863 with your tax return. Tip number four, get a tax deduction for education. The tuition and fees tax deduction can reduce your taxable income by as much as $4,000. It's for the cost of enrollment and required course related books, supplies, and equipment. You can take it even if you don't itemize deductions on your tax return. Note that there are income limits for both the education tax credit and deduction and that you can't take both of them in the same year. You claim the tuition and fees tax deduction by submitting IRS Form 8917. See the form for more information about who's eligible for it. This episode is brought to you by AARP. Ten years from today, Lisa Schneider will trade in her office job to become the leader of a pack of dogs. As the owner of her own dog rescue, that is. A second act made possible by the reskilling courses Lisa's taking now with AARP to help make sure her income lives as long as she does. And she can finally run with the big dogs and the small dogs who just think they're big dogs. That's why the younger you are, the more you need AARP. Learn more at aarp.org/skills. At Credit Union of Colorado, banking doesn't have to be like this. Big national banker here to let you know we are increasing fees. Again, now some people will say they are hidden fees and if I had my choice, I'd hide them. But I guess that's not legal. So for now, please reference line 572 on page 36 for all new fees this month. At Credit Union of Colorado, we have better interest rates, seamless mobile banking, and no hidden fees ever. Credit Union of Colorado. Honestly, good. Learn more at honestlygood.org, federally insured by NCUA. Introducing Wendy's new Saucy Nugs, the nugs you love, covered in your favorite sauces. So no matter what flavor you're craving, Wendy's has you covered. Grab Wendy's new Saucy Nugs today. Open till midnight or later. At participating U.S. Wendy's, ours may vary by location. Tip number 5. Get a 65% reduction on the cost of COBRA health insurance. COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It provides continuing group health insurance for up to 18 months after you become unemployed if you elect to pay the monthly premiums. The American Recovery and Reinvestment Act of 2009 provides a premium subsidy to qualified individuals who become unemployed between September 1st of 2008 and February 28th of 2010. If you had health insurance through work and elect to take COBRA insurance, you're responsible for 35% of the premium for a period of 15 months. For a COBRA premium that's $1,000, your portion of the payment would be $350. For more information, see the Department of Labor's website at dol.gov. Tip number 6. See if you're eligible for the earned income tax credit. If you've been out of work for a while, it's likely that your income will be substantially reduced. That means that you may qualify for tax benefits that you didn't even know about. The Earned Income Tax Credit or EITC helps low and moderate income taxpayers with a credit that's determined by the amount of your earned income, filing status, and family size. Although you don't have to be married or have children to qualify, the IRS says that one in four eligible taxpayers fails to claim this credit. Use the EITC Assistant at irs.gov/eitc to see if you're eligible. Finding your next great opportunity is a challenge for anyone in today's job market. If you're feeling frustrated, try a new approach like doing more online and face-to-face networking. Reach out to friends, professional organizations, alumni organizations, headhunters, placement agencies, and internet job boards. Remember that a temporary or part-time job may lead to a full-time permanent one. If you're working, I hope you'll share this information with any of your friends or family members who may be unemployed. And if you're still on the job hunt, keep your chin up and stay positive. Send your email comments or questions to me at money@quickanddirtytips.com and be sure to become a fan on the MoneyGirl Facebook page. I'll see you there. I'm glad you're listening. Chaching. That's all for now. Courtesy of MoneyGirl. Your guide to a richer life. At Credit Union of Colorado, banking doesn't have to be like this. Big National Banker here, just saying we'd like to apologize to you for that thing we did. Was it selling your information, canceling your personal loan? Who can say that's for the lawyers to figure out, so just know it's not going to happen again. Until it does, again. At Credit Union of Colorado, we have better interest rates and seamless mobile banking. All while having a heart, Credit Union of Colorado. Honestly, good. Learn more at honestlygood.org, federally insured by NCUA. Introducing Wendy's new Salsy Nugs. The nugs you love covered in your favorite sauces. So no matter what flavor you're craving, Wendy's has you covered. Grab Wendy's new Salsy Nugs today. Open till midnight or later. At participating US Wendy's, hours may vary by location. [BLANK_AUDIO]