CPA, Tom Walpole joined Ali Touhey Monday morning on News 8 at Sunrise to discuss jobless taxation issues.
Walpole said you can deduct certain expenses for looking for a new job in your present occupation, even if you don't get a new job. Certain moving costs are deductible if you meet the time and distance requirements. Generally, your move has to be closely related in time to the start of your new job and you must have moved at least 50 miles. "Generally, you can deduct employment and outplacement agency fees and amounts for typing, printing, and mailing copies of your resume to prospective employers for work in your current occupation. Travel costs are deductible as well," Walpole said.
Severance pay is taxable in the year that you receive it. The same is true with accumulated sick and vacation pay. Your employer will include this amount on your Form W-2 and will withhold appropriate federal and state taxes. Unemployment compensation is taxable, according to Walpole. "Your state unemployment insurance benefits and your extended benefits are taxable. You may choose to have 10% withheld for federal taxes by completing Form W-4V. New York State will provide you with a Form 1099-G prior to January 31st of each year, showing the amount of taxable benefits paid in the prior year, Walpole added.
As far as selling your home is concerned, the first $250,000 of GAIN is tax free ($500,000 for a joint return) for the sale of someone's principal residence if they have owned and lived in it for 2 of the last 5 years and not excluded the gain on a home in the past 2 years.
What if your employer filed bankruptcy or went out of business, how do I get my Form W-2?
In either case the employer must file and report your wages and withholding on a Form W-2 at year's end. If you do not receive your Form W-2, try to contact your employer or their representative. If you are unsuccessful, the IRS can assist you in filing a substitute Form W-2 using your records. A good precaution is to keep year-to-date records or pay stubs until you receive your Form W-2.
Finally, Walpole said tuition deductions are possible if you're looking to freshen up on certain skills. You may qualify for the Hope or Lifetime Learning educational credits. Sometimes, the tuition costs can even be an itemized deduction.
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