Were you laid off from your job last year? If so, there’s a chance you’ll be able to claim some tax breaks or credits. You might even qualify for tax deductions that you weren’t eligible to receive last year. However, you need to know how to successfully navigate your tax return in order to receive these tax breaks.
Being informed is a must. Use these five tax tips to ensure you get the tax benefits you deserve.
FILE YOUR TAX RETURN RIGHT AWAY
When you lost your job, you might have moved into a lower tax bracket. Consequently, the withholding from your previous employer might have been too high, which could entitle you to a larger tax-refund check this year. The earlier you file, the quicker that extra money could arrive in your bank account.
Also, if you unknowingly owe money to the IRS, the sooner you find out, the more time you have to come up with the money. Don’t procrastinate — file your tax return as soon as possible.
SEE IF YOU’RE ELIGIBLE FOR THE CHILD AND DEPENDENT CARE TAX CREDIT
If you lost your job last year, but you were still able to bring in earned income, you might be entitled to claim the child and dependent care tax credit. To be eligible, both you and your spouse (if filing jointly) must have earned some income during the year, whether it was wages, tips, other taxable employee compensation or net earnings from self-employment. However, please note that your unemployment compensation does not count as earned income.
CLAIM JOB-HUNTING TAX DEDUCTIONS
If you’re looking for a job in the same field, you can write off some of the expenses you incur, such as traveling costs for interviews, employment-agency costs and resume-printing costs. Every cost you claim must be itemized, and the total amount of expenses claimed must be greater than 2 percent of your adjusted gross income. While expenses such as purchasing a new suit and getting a haircut might also be pertinent, these are not eligible tax deductions.
DEDUCT MOVING EXPENSES
Did losing your job force you to move so you can start a new one? If so, you might be able to claim moving expenses if your new job is at least 50 miles farther away from your old home than your old job location was from your old home. Deducting your moving expenses can result in a sizable deduction, as the average cost of an intrastate move is $1,170, and the average cost of moving between states is $5,630, according to U.S. News.
DO YOUR TAXES FOR FREE
If your income was $60,000 or less last year, the IRS can offer you Free File software. All you need is an email address, a copy of your tax return from the previous year and any necessary documents for your income and deductions. Not only does Free File software save time, but it also allows you to get your money faster and track the status of your tax refund. Purchasing the software on your own can cost upwards of $90, and sitting down with a tax expert who prepares your return in person can cost at least $200, according to Bloomberg.