The information in this article is up to date for tax year 2023 (returns filed in 2024).
In January 2024, the U.S. Bureau of Labor Statistics reported that 6.1 million people were unemployed. Losing your main source of income can be devastating. However, your new tax status may make you eligible for tax breaks reserved for those with lower incomes. Here are some tax tips for the unemployed to help you maximize your refund and get through this rough patch.
File a tax return even if you don’t have to
If you’re single, under 65 and earned more than $13,850 in 2023, you must file a tax return. Even if you aren’t required to file, it may be worthwhile to do it anyway. You may be eligible for a refundable credit like the Earned Income Tax Credit (EITC) which is worth up to $7,430 if you meet the qualifications. Refundable credits can produce a refund when you don’t owe any taxes. Another reason to file your taxes is because if your employer deducted taxes from your pay, you may be able to get your money back.
Do your taxes early
Most people who file a tax return get a refund. This is money you can use to stay afloat until you find your next gig, so don’t procrastinate. According to the IRS, the fastest way to get your refund is to e-file and have your refund direct deposited into your bank account. If you have a basic tax situation, you can file a FREE simple federal return at ezTaxReturn.com.
Unemployment compensation is taxable
You’re going to owe federal taxes on your unemployment income. Depending on where you live, you may also need to pay state taxes. A key tax tip for the unemployed is to make sure you set aside a portion of each check to cover the bill. Aim to save 10% of each payment. Alternatively, you can ask to have taxes withheld or make quarterly estimated tax payments.
Claim all the tax credits you can
Depending on how much money you earned, you may now be eligible for tax credits you weren’t able to claim before. Here are a few you may qualify for:
- Earned Income Tax Credit (EITC) – The credit ranges from $600 to $7,430 depending on your filing status and number of children you claim. You don’t need to have a child to get the credit.
- Child Tax Credit – Parents can get $2,000 for each qualifying child age 16 or younger.
- Child and Dependent Care Credit – If you paid someone to watch your kids while you worked or looked for a job, you may be able to deduct a portion of your childcare expenses.
Do your taxes at ezTaxReturn.com and we’ll guide you to every credit and deduction you deserve, so you get your biggest possible refund.
Get assistance from the government
Don’t be ashamed to ask for help if you need it. The government has several programs which can assist you with food, housing, healthcare, and other necessities. Here are some programs you can look into:
- Food – Supplemental Nutrition Assistance Program (SNAP)
- Healthcare – Medicaid; Children’s Health Insurance Program (CHIP)
- Housing – Subsidized Housing, Housing Vouchers, and Public Housing programs. Also, check out Low Income Home Energy Assistance Program (LIHEAP) for assistance with heating and cooling costs.
- Financial assistance – Welfare or Temporary Assistance for Needy Families; Supplemental Security Income (SSI).
If you’re in need, determine which programs you’re eligible for and apply.
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.