Many of life’s events such as losing a job, foreclosure of a home or even forgiveness of a debt impact the payment of taxes. The tax law offers hope in these situations. As an example, if a taxpayer’s income decreases, he or she may be eligible for certain tax credits, such as the Earned Income Tax Credit. In this blog, We will present a list of quick answers to life event situations that have a potential impact on an individual’s tax burden. For more information see our blogs: Part 1 – What If: Job Related Life Events and Struggling Taxpayers; and Part 2 – What If: Debt Related Life Events and Struggling Taxpayers.
How Your Job Hunt Could Lower Your Taxes
For taxpayers seeking a new job in their same line of work, a tax deduction for some job search expenses may be available. First and foremost, these expenses must be related to a job search in a taxpayer’s current occupation, as expenses related to a search for a job in a new occupation may not be deducted. If an employer or third party provides reimbursement for the expense, it may not be deducted.
Here are some expenses that may be deducted:
- Employment and job placement agency fees;
- Costs of preparing, copying and mailing résumés to prospective employers;
Part 1 – What If: Job Related Life Events And Struggling Taxpayers
If you have any type of financial difficulty, keep in mind that there’s a tax impact to events such as job loss or foreclosure. Such consequences may not necessarily be predominantly negative. For example, if your income decreased, you may be newly eligible for the Earned Income Tax Credit or other tax credits, which is a good thing.
Of the utmost importance when facing some financial obstacle is to contact the IRS immediately if you believe that you may have trouble paying your tax bill. Please see our blog You Can’t Pay Your Tax Bill in Full You Have Options…An experienced and knowledgeable tax attorney may help ease any financial burden. Remember that to avoid additional penalties, you also should always file a tax return even if you are unable to pay.