Entrepreneur.com provided some useful tips recently to individuals who have recently been laid off, and how to go about doing their taxes. Check out a snippet of the post below, or you can read the full article by clicking here.
Around 2.6 million people lost their jobs in 2008.
Close to 600,000 more jobs disappeared in January 2009.
Horrible.
But there is a little good news. Believe it or not, Uncle Sam offers some tax breaks to folks in this unfortunate position.
So whether you lost your job in 2008 or 2009, listen up. You deserve these perks.
First, your income.
If you were a salaried employee, you’ll have your normal W-2 income and withholdings to report on your 2008 tax return.
If you received any severance pay, you should see that too on your W-2, also subject to federal income tax withholding.
Now let’s talk about your unemployment benefits. Remember, that’s taxable income too. So if you starting receiving benefits in 2008, hopefully you elected to have federal tax withheld. Now unfortunately, the government will only withhold up to 10%, so if you’re in a higher tax bracket, you will be underwithheld. But it’s certainly better than nothing.
If you are still on unemployment in 2009 and haven’t had any federal tax withheld yet -- stop what you’re doing! Go file Form W-4V -- Voluntary Withholding Request right now and request to have 10% withheld for federal taxes.
Again, this may not cover your whole federal tax bill -- and it doesn’t even touch your state tax bill -- but it’s better than nothing.
You should still be conservative and set a little bit of that unemployment check aside each week. Put that money in a little savings account and hold it till tax time so you’re not totally floored with a big tax bill.
