American Morning
Broke, unemployed, and you owe the IRS
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
-Travel/Phone Expenses
-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.
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irs nightmares
paying back restitution of 88,000.00 to irs
judge gave me 2 months in federal prison,already did that part,
then gave me sentance for 10 days a month in county jail for next 6 months.
that is hard considering i work in the oilfield and work 24 hr call.
our work may fall where i can get in some work days or it may not just ,depends on how it falls.
what is confusing to me is
i pay my 25% restitution (ordered by federal judge) it goes to obama right,then obama sends tax dollars to the banks and mortgage companies right,then the mortgage companies can't help me out while i am trying to save my house,in fact because of my notes behind on the house they raised my notes from like 1000.00 a month to the new payment of 2100.00 a month.
if they don't do better than this with the money obama gave them.
then there is going to be a lot more houses going back to the banks.
sort of confusing to me??
I was in a bar watching CNN and about 20 of us tried to figure out what CNN stands for we came up with collecting news nuggets.
Very practical advice, thanks for the tips!
I owe the IRS, living paycheck to paycheck. Thankfully I still have a job, and I am hoping to have my 2002 back taxes paid off this year.
Not too helpful for my situation. Due to personal circumstances, I did not work and went through savings – including IRA. I am returning to the workforce after several years and all was well until a couple of months ago. Mortgage payments cannot be made, have no money for basics and owe the IRS taxes on IRA. Have not been able to get work and I just stay home and save my gas for really important trips, like emergencies, trips to unemployment office to receive info on employment, possible interviews. A friend just gave me a gift of the internet access and use of a phone. Until then, no one could even call me for an interview. Everything had to be through the internet at the library.
So any suggestions for folks who literally do not have a cash flow, take no unemployment funds and are waiting for the creditors to do what they will?
I am 57 today and no signs of work. I am professional in status and the hourly folks are polite, but they won't even consider me. After the interview, they basically think I am going to work for a short time and then move on to something more lucrative. I take the interviews seriously and try to assure them that I really need the work.
Thanx – Deb
eXCELLANT ARTICLE FOR THIS ECOMONY WE ARE ALL IN AT THIS TIME. pEOPLE DO NEED TO KNOW THE FACTS. THANK YOU