Important Tax Advice for Unemployment Benefits and Extensions

The caveat in this article is that I am not a tax professional and all tax advice within this article is strictly from research. However, as a tax paying individual and like many Americans who have been unemployed I understand the need to save my money. Unemployment payments barely cover expenses and not having to write a check to Uncle Sam on tax day is important if you don't have to. After consulting with many experts, here are a few suggestions to those unemployed and filing taxes this year:

* First, even if you have not worked and are collecting unemployment benefits you need to file income tax returns. If you don't report them and you owe taxes the cost could be substantial. There are a few good things you can claim if your income has dropped substantially.

* The first $2,400 in unemployment benefits is tax free based on the stimulus bill that exempted those first few unemployment checks. If your partner is unemployed and your filing jointly the number doubles to $4,800

* With a lower income, you may want to itemize your tax returns and not use the standardized deductions especially if you have a high mortgage, high medical bills, or some other deductions.

* You can write off job hunting expenses such as career coaches, recruiters, job training, resume writing, and driving to and from interviews. Make sure you have the receipts to back them up.

* If you have someone give you money such as a family or friend to help with your expenses, you don't have to claim that as income.

* If you made less than $57,000, you can file your taxes electronically for free and get a refund faster. The IRS website has an area for free tax software to help those lower income families.

* Finally, make sure you file even if you can't pay the taxes you owe right now. The IRS is being flexible because of high unemployment and giving tax payers time to pay on installment plans.

As I have said, I am not a tax professional and the above items were suggested to me from someone who is very intimate with the current tax codes. This is a hard time of the year for those who are financially strapped. Having the IRS hovering over our heads doesn't make the situation any easier. However, if you spend some time with these items above you might give yourself a chance.