From CNN’s Sarah Hagen
This year tax attorneys are expecting an increased number of people will wait until after the April 15th deadline, to file their taxes. An estimated 81-100 million people have not yet filed, according to Roni Deutch, the author of "The Tax Lady's Guide To Beating the IRS". Only 70 million people had filed their taxes as of March 15th, according to Deutch.
Anyone can apply for a six-month extension (Form 4868). According to Deutch, in a bad economy, individuals will most likely owe the IRS and won't be able to afford their taxes. Tax attorneys are expecting a rise in the number of automatic six-month extensions.
Hypothetically, you're broke, you're unemployed and you owe the IRS. Well, there are a few opportunities to save some money. President Obama's new administration is working with the IRS to ease the burden for 2009. For many unemployed workers, the first $2,400 received from unemployment compensation is not subject to taxation, according to the IRS; however, "There is no such thing as a tax fairy, ultimately, unemployment will qualify as taxable income," according to Deutch. Don't be fooled by severance packages either, those are taxable too.
According to the Bureau of Labor Statistics, 5.1 million jobs have been lost since the recession started in December 2007. Many unemployed individuals are now trying to market themselves toward new employers. This can be costly. Fortunately, Roni Deutch says that there are many job-hunting expenses that are deductible.
-Resumes and Portfolio Costs (including postage)
-Advertisements (magazines, newspapers, billboards)
-Research (books and educational courses)
-Head Hunter/Career Counseling
-Legal Fees (review for an employment contract)
Although this is great news, Deutch warns that the tax devil is always in the details, "Save the records from all expenses." It is also important to know that these expenses are only deductible when a person is looking for a new job in the same industry. What if your industry has been decimated by the economy? Deutch says, “Too bad.”
A freelancer or independent contract worker will be considered "self employed" once that individual has turned a profit of at least $400. This is important to know, since that individual will then be required to file a tax return; however, more tax deductions can be found here too (website costs, insurance, business cards etc.)
What about receiving a helping hand? Anyone can give an 'individual gift' of $13,000 to someone in need, and neither party pays tax on the gifted money, according to Deutch. So, even with the April 15th tax deadline fast approaching – there are some opportunities to help make it less painful.