Combining the words "unemployment" and "tax day" in the same sentence may seem like an oxymoron, but it actually makes for smart tax planning and perhaps some relief, say officials from the employment pros at Challenger Gray Christmas.
If you've been laid off, there are tax breaks waiting in the wings if you know where to look. So America's 13.7 million jobseekers and Minnesota's 161,000 unemployed: listen up.
"It is critical that these individuals seek out any financial advantage they can achieve while between jobs,” said CEO John Challenger. He admits that it's "undoubtedly an overwhelming task" for most people to figure out eligibility for a particular deduction or credit. But "for the unemployed it can be even more daunting, since their top priority is to find a job, not a tax credit."
But soldier on, you must. Luckily, there's help.
Across the Twin Cities, many public libraries host free tax clinics that are staffed with volunteers. (Hint. Call first to make an appointment). Separately, the IRS has said it's willing to work with the unemployed, Challenger said.
What's important to remember is that the unemployed may be able to write off expenses associated with continuing education classes taken to keep their skills fresh. And they may be able to deduct travel expenses associated with job interviews or maintaining a home office for doing freelance assignments, Challenger said.
“The Internal Revenue Service recognizes the difficulties [of] those who have been unemployed.... and has announced measures to help those who cannot meet their financial obligations,” Challenger said. In some cases, the IRS will consider settling a debt for less than the full amount. In other cases, the IRS is willing to wave late penalties (but not interest) for up to six months.
The IRS said it will hold three Saturday Open Houses at select IRS offices around the country this month. Taxpayers can find the location, telephone number and business hours of the nearest assistance center by visiting the Contact My Local Office page on IRS.gov.
Besides, individual meetings, the unemployed and job seeking tax payers can find miscellaneous deductions from Publication 529 on the IRS website.
Challenger also suggested that full- and part-time workers consider deducting eligible job-related expenses that exceed two percent of adjusted gross income.
These types of miscellaneous deductions may include unreimbursed employee expenses such as: dues paid to professional organizations; depreciation on a business computer or cell phone; licenses and regulatory fees; home office used exclusively in one’s work; subscriptions to professional and trade magazines; travel, transportation, entertainment and gift expenses related to one’s work; union dues and expenses; and work-related education.
A looming deadline has captured the attention of a nation stressed by high unemployment and an all-too-slow economic recovery.
Temporary payroll tax cuts and extended unemployment benefits are set to expire Dec. 31 unless Congress extends them when it returns from its Thanksgiving break.
Doing nothing means a working U.S. family can expect to pay about $1,000 dollars in extra payroll taxes in 2012. The tax hike would hit Jan. 1. Happy New Year.
Debt watchers insist that Congress needs to hold the line. Extending the measure won't be cheap. It would cost the U.S. Treasury an estimated $112 billion, according to IHS Global Insight, Calculated Risk, The Economic Policy Institute and other fiscal observers.
Still, several economists say the cost of extending such tax cuts and jobless benefits may carry a lot of economic bang for the buck at a time when American's financial psyche could use a boost.
U.S. unemployment still stings at 9 percent, meaning that about 14 million Americans remain unemployed, 5.9 million of them have been without work for 27 weeks or longer, according to the U.S. Bureau of Labor Statistics. Minnesota's jobless rate sits at 6.4 percent, meaning that about 200,000 residents here want to work but can't find jobs. Unemployment benefits have kept many afloat.
The researchers at IHS Global Insight predict that the U.S. gained 125,000 jobs in November, even with the addition of thousands of holiday hires. More job cuts in government and home construction are expected for the month, IHS economists say.
Still, if accurate, November's overall job forecast would be an improvement over the 80,000 jobs gained in October, but not enough to make a dent in the jobless rate. IHS Global economists predict that the jobless rate will remain stuck at 9 percent.
What will Congress do? It remains to be seen. Only one thing is certain: American workers and those looking for work will be watching.
The state is accepting applications from investors and companies wanting to participate in the Minnesota Angel Tax Credit Program in 2012.
The program offers a $12 million pool of angel tax credits to qualified investors of small start up firms that need cash to hire workers and buy supplies and equipment.
investors may receive a 25 percent tax credit on investments of at least $10,000 in emerging companies that specialize in high technology or new proprietary technology. The businesses that receive the angel funding cannot have more than 25 workers or be older than 10 years. And at least half of their workforce must be in the state of Minnesota.
The state’s Department of Employment and Economic Development (DEED) had $16 million in angel tax credits available in 2011, but officials said those credits ran out this week because of strong response to the program.
Since launching in July 2010, the state has made $23 million in tax credits available to investors.
"The Angel Tax Credit Program has been a huge success," said DEED Commissioner Mark Phillips. "This program is making investment funding available to promising startups that often struggle to attract capital in their early stages of development."
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