Unemployment and Taxes

Unemployment is an uncertain and stressful thing in any one’s life.  However, it can be all the more complicated
by the many questions surrounding your tax obligations after losing your job.  This article will discuss a few of the common questions surrounding your tax obligations following unemployment.

If you were recently laid off by your place of employment, you may be curious as to whether or not the severance package they gave you is taxable or not.  Unfortunately, the answer to that question is yes, it most certainly is.  The money you received as a result of your termination is considered to be taxable income and will be included on your W-2 at the end of the year.  Other taxable income includes any payments you receive for unemployment insurance or other benefits you may receive while unemployed.  This includes an unemployment payment made by the government if you have filed for unemployment with your state.

Gifts from friends or family members during this difficult time are generally not taxable if they are kept under a specific amount of money.  Do some research on your state laws regarding the giving of gifts and taxes to make sure that each family member or friend that helps you out stays under the taxable amount.

As far as dipping into your retirement savings goes, if the money is simply coming from a savings or money market account, there is no penalty for withdrawals.  However, if you are planning on making a withdrawal from a different type of retirement plan or from an IRA account, you will have to pay taxes and a penalty if you are under the age of retirement.  These taxes, like the ones you will have to pay for your severance check, will be due at the time that you do your taxes for that year.  So, if you took out the money in November of 2011, you will have to pay the taxes on that money in April of 2012.

Following unemployment, you are probably diligently seeking another job as soon as possible.  It is important to note that the expenses incurred while looking for a new job can be written off as a tax deductable expense.  A financial planner or tax expert can help you with this process if you are unfamiliar on how to do it.

Finally, now that you have found out just how many things continue to be taxed following unemployment, you may be curious as to whether or not you can actually afford to pay what you owe to the IRS.  What is
you can’t?  A simple phone call to the IRS with an explanation of your situation should be able to remedy the problem.  The IRS wants its money and has payment plans that may be able to help you meet your tax obligations.

Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.

Tax Carnival Ecstasy – March 27, 2012

Welcome to the March 27, 2012 edition of Tax Carnival Ecstasy. We start this edition with Stefanie who has an article Tax Time, and how she is loving TurboTax while filing her own return. Mark Roberts takes a look at the The Tax Brackets for 2012. We  have a post on the Common Bookkeeping Mistakes That Weigh Down On Business Profits by Bill Smith. And finally there’s a look at the 2013 Federal Budge and how it affects your taxes. Hope you enjoy the articles, bookmark, share, tweet, like on Facebook and come back soon.

Frank Goley presents Bond Analysis posted at Easy Forex News.

Amy Gardner presents What is a Personal Loan? | Personal Loans posted at Personal Loans, saying, “none

credits

Amy Gardner presents Little Known Advice for Those Seeking a Personal Loan posted at Small Business Credit Cards, saying, “none

Deborah Brown presents Credit Options for Your First Credit Card | First Credit Card | How to build credit with first time credit cards. posted at First Credit Card, saying, “none

Sandra Adams presents Improving Your Credit Score posted at Credit Cards for No Credit, saying, “none

filing

Stefanie presents Tax Time | Making of a Mom posted at Making of a Mom, saying, “I love tax time because TurboTax makes it possible for normal people (not tax professionals) to complete their own taxes!”

Mark Roberts presents The Tax Brackets for 2012 posted at Tax Brackets, saying, “The tax brackets for 2012 have been announced. This post highlights the new brackets for 2012.”

retirement

David K presents Baby Boomers are you Worried about having enough saved for retirement? posted at Personal Finance Blog, saying, “Here’s a simple approach: work just a few years longer. By accumulating more savings and shortening your withdrawal period, you’ll reduce the lump sum needed to generate the necessary income at retirement.”

Dividend Growth Investor presents Does entry price matter to dividend investors? posted at Dividend Growth Investor, saying, “The reason for the lost decade in stocks is that many otherwise quality companies were overvalued in the early 2000s. For example Johnson & Johnson (JNJ) was trading at 29.30 times earnings in early 2000, whereas McDonald’s (MCD) traded at 26.90 times earnings. Even some of the best dividend stocks are not worth paying more than 20 times forward earnings.”

taxes

Bill Smith presents Common Bookkeeping Mistakes That Weigh Down On Business Profits posted at 2009 Tax, saying, “Bookkeeping serves as a foundation for sound financial decision making and planning and therefore it is essential that financial records are kept up-to-date.”

Bill Smith presents 2012 Taxes And The Proposed 2013 Budget posted at2011 Taxes, saying, “President Obama has plans to make changes in the tax code to raise funds for his 2013 budget to jump start the U.S. hiring.”

Bill Smith presents Proposed Changes From 2012 Taxes posted at2010Taxes, saying, “The current administration’s proposed budget for 2013 includes some items from 2012 taxes with a wish list of ideas added.”

Bill Smith presents 2012 Taxes And The Proposed Tax Rates posted at 2011 Taxes, saying, “President Obama is planning to tax income from capital gains as ordinary income. This will increase the top tax rate to 39.6 percent.”

CultOfMoney presents How government budgets work posted at CultOfMoney, saying, “Whether you’re trying to get a sweet-ass government job, planning to run for office, want to know how you can influence the process to your favor, or you’re just a concerned citizen, knowing how the federal state, county, and cities create a government budget, and knowing how government budgets work in general will help you. So become involved and go to a local budget hearing, and after reading this article, you’ll sound like someone in the know whose opinions should be respected.”

tips

DeWitt Dudley presents What Are The Best Trust Structures To Protect Liquid Assets? | Law Offices of Givner & Kaye posted at Law Offices of Givner & Kaye, saying, “Why is the non-U.S. trust so effective? Because the both the trust and the assets are not subject to the jurisdiction of a judge in the United States.”

Sean presents Student Car Loans posted at My Next College, saying, “Students still must have adequate income to afford the payment and insurance.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

 

Technorati tags: tax carnival ecstasy, blog carnival.

Simple Tips To Help You Save On Taxes At Work

If you want to reduce the amount of tax you pay, you should let your employer cover some of your expenses.

By simply allowing your employer to cover your expenses with pre-tax dollars, you will be able to save hundreds and sometimes even thousands of dollars annually.

The best way to save on taxes.

Make arrangements with your employer to pay for some of your expenses every month. Ask you employer to pay for an expense straight up. Any employer will do this because, a) Its a wonderful thing to do, and b) The expense will be a deductible expense which can be deducted when calculating taxes.
Case  Study
Pretax Expenses

Assuming your income tax bracket is 25 percent and you pay a monthly rail pass of 100 dollars out of your after tax dollars. This means that your income was 133.33 dollars but 33.33 dollars was deducted as taxes before you could put your hands on it and the remaining 100 dollars is what you withdrew from the bank account for your monthly rail pass.

If you asked your employer to pay for your monthly rail pass using pretax dollars, only 100 dollars of your income will be used. This means that you will save 33.33 dollars every month or 400 dollars annually.

All you have to do to save on taxes is to identify expenses that your employer can pay for you using pretax dollars and contact human resources to see how the company can help you.

Don’t Waste Your Tax Refund: Make it Work for You

If you are one of the several million Americans who is anticipating a sizable tax return refund this year, then you know how very exciting the prospect can be. There are just so many things you can do with that lump sum of cash, right? However, the truth is that most people have great intentions for how they will make use of their tax refunds, only to put it into the checking account and watch it dwindle away on trivialities. The only way you can avoid this situation is to put some careful consideration into how to best reap the rewards of paying your taxes all year. Don’t waste your tax refund. Instead, make it work for you. Here are some ideas for how:

Retirement savings plan. Tax refund time is the perfect time to set up your 401K. Make an appointment with a financial adviser to size up your options (or take advantage of your employer’s 401K program, especially if your employer offers company matching). Contribute as much as the program of choice will allow for, or the total amount of your refund – whichever is greater.

Investments. Have you always been interested in learning how to grow your money through investment instruments? Well, now is the time to do it. Again, this is where a good financial adviser comes in. Weigh out all of your options carefully, and if you have enough money to break into more than one investment, experiment diversifying with some high-risk and some low-risk investment vehicles.

Getting out of debt. Is your mounting credit card debt beginning to eat up the money you could be putting toward saving and investing for your future? Then before you even consider using your tax refund for anything else, pay off that debt! Think of it this way: all of those fees and interest payments will compound the amount of money you owe over the long run – and that equates to more debt than any interest you’d make on an investment.

Your goals. Is there something you’ve been wanting to do for a long time that you just haven’t had the funding for? Perhaps it’s a small business venture, or even a European excursion. Consider your goals and dreams in life, and then consider how much they might cost you. It could be that tax refund time is the perfect time to have the experience of a lifetime.

As you can see, your tax refund can be a great opportunity to get ahead in a number of different ways. Consider these smart choices when you get that long awaited check in the mail, and make this year’s tax refund really count.

About the Author: Jamey Vazguez applies her tax refund to her investment goals and retirement plans every year. She usually keeps about $100 and applies it to some of the best Los Angeles deals she can find, to treat her family, but the rests is invested in her future.

Unusual Tax Deductions You Should Not Claim

More and more people are filing their tax returns with turbo tax and other software so they can try tricking the system. I have never been a person to take a chance as far as tax deductions are concerned. However, some people will gladly take the risk boldly going where most of us would only dare.

The Minnesota Society of Certified Accountants has compiled a list of odd tax deductions according to a survey given to its members. Of course, these were thwarted by their accountants.

Chairwoman Sara Portner says there is a high profitability they would get sent an angry letter from the IRS if a professional had not interfered. If they use turbo tax, the software can not distinguish unusual tax deductions.

Children may get on your nerves but that is off-set by the tax deduction you can claim each year. The deduction can not be claimed for the year unless they are actually born. One woman thought she could claim an unborn baby during the times she was expecting although she put the child up for adoption. Another client thought he should be able to claim a city official because they the salaries.

Someone tried to claim a former spouse.You cannot claim a spouse even if they are not working. According to turbo tax, you may get an exemption that is equal to the you would get for a dependent. Do not try to increase charitable donations. One person believed you could use donated blood as a deduction. Keep in mind you may get audited by the IRS if they are suspicious of your tax deductions.