Rule of the corporate jungle: mergers bring layoffs. When DuPont and Dow recently wed, 1700 jobs disappeared. Maybe you were recently laid-off, or someone you know?
Losing your job is hard. It not only dents your self-esteem but your bank account as well. Is there any financial silver lining to help soften the blow come tax time?
If the New Year brought you some major economic challenges, your tax situation may be dramatically different from years past. The good news is you have the right to some useful tax breaks such as deductions on job search costs, health insurance and job-related moving expenses.
- Job Search Expenses – You can deduct job search expenses, as long as they are considered ‘reasonable, ordinary and necessary.’ This would include travel for job interviews, the cost of creating a resume, and any subscriptions to job-search websites
- Moving Expenses – If you need to move to a new location to start a new job, your job-related moving expenses can be deducted. The only stipulation is that the new job must be at least 50 miles farther away from your home than your previous job.
- Health Insurance Premiums – You may be eligible for the Health Coverage Tax Credit. This is available to workers who were laid off work due to the outsourcing of jobs to foreign countries, or to the effects of foreign trade competition.
- Tax Credits and Self-Employment – Your income reduction may qualify you for the Earned Income Tax Credit. Freelancing or starting a home business to cover your budget gap also brings tax deductions related to travel expenses, office expenses, advertising, or the cost of books, tools and uniforms.
These are just a few tips to help you navigate the uncertain tax waters after a lay-off. So, continue looking for new job opportunities (or whether you’d rather be a consultant or open up that cupcake store you’ve been dreaming about!). We are here to provide advice and counsel to help you get all the financial and tax benefits you’ve earned.
So, how did you make it through your layoff?