Income Tax Resources for People Who Lost Their Jobs

With the nation suffering from an economic crisis, most individuals will more than likely look to keep more of their money by shopping a lot less for their family. Consequently, a lot of businesses are impacted as sales tend to slow down and profits also are down. For the most part, employers will try to reduce costs by letting people go. The resulting effect would extremely impact the economy even more due to more non employed people will have fewer savings to spend and this can start a trickle effect on the economy.

If people are terminated from their companies, there are a number of financial effect that you have to be cognizant of. A nice sample would be the financial impact on your family's day to day expenses. In addition, the following are the major tax effect in which you have to be concerned with.

Drawing Down on Your Retirement Money - Most businesses offer various retirement plans such as deferred contribution There are some companies that allow you to keep your retirement plans with them. However, most companies don’t and would distribute the funds to you. You only have sixty days to roll it over to another retirement plan like an IRA or your new company's retirement plan. If you do not, the sum will be added in your taxable earnings and would become taxable to you. To add to that, you will have to pay a 10 percent early withdrawal fine if your age is 59 1/2 years old or less at the time of withdrawal. Lastly, when you still have an outstanding balance on the funds you borrowed against your retirement plan, the outstanding loan amount will be automatically regarded as a early withdrawal and will become taxable to you.

Searching-For-A-New-Employment Cost You Can Deduct - You can write off more costs when you are looking for a new job in your current occupation. Samples of these are resume writing expenses, postage for sending copies of resume, fees paid to job agency, vehicle costs from your house to interview site and vice versa. Moreover, you can write off certain travel costs (must be ordinary and necessary) like airline tickets, auto rental and hotel accommodations when you travel outside of your main area for a job interview. On the other hand, you may only write off these things if you are filing Schedule A. Moreover, these costs are listed on the miscellaneous expenses area that are subject to the 2 percent threshold on your Adjusted Gross Income.

Medical Benefits - More than likely that you may be paying your own medical insurance premium and other healthcare expenses if you do not have any. These costs can be eliminated off on your Schedule A using the healthcare expenses category of your tax return. But, just like the miscellaneous expenses, this is also subject to Adjusted Gross Income limitation of 7.5 %.

Spruce Up Your Finances is the excellent online site where you can read the top facts and opinions about online tax filing and mortgage interest credit.