Thursday, February 12, 2009

Tip Jar: If that rainy day comes...

If you're among the formerly employed, Patsy Schober of H&R Block in Charlotte has five tax tips you'd be wise to consider.

Each week, The Squeeze will talk to finance, tax and job experts about how to navigate the downturn. Have a question you'd like answered? Let us know.

Says Patsy:

1. Unemployment benefits are taxable income: To avoid being shocked by a tax bill on April 15, taxpayers can complete Form W-4V – Voluntary Withholding Request so that 10 percent of an individual’s benefits are withheld for federal taxes. This won’t cover the cost of state taxes, so make sure to plan for that as well.

2. Job search expenses may be deductible: Expenses that may qualify include out-of-pocket travel to interviews, educational courses or certification related to your work, and tax preparation and planning fees. Job-search expenses are claimed as part of the miscellaneous itemized deductions.

3. Another potential deduction could come from a job move: Qualified moving expenses (the cost of moving you, your family and your belongings) may be deductible, even if you don’t itemize. To be eligible, your move must meet certain rules, so consult tax rules or your tax professional.

4. Check your lump-sum severance withholding: Companies that provide lump-sum severances are generally required to withhold 25 percent to cover federal income tax. This may or may not be enough to cover federal taxes. State taxes would also have to be accounted for as well.

5. Want it all at once? Think again: These can be a quick boost to retirement savings, but income infusions bring tax implications that you should carefully consider. If a lump-sum payment makes your total annual income higher than it was last year, some credits or deductions that you normally claim may be reduced or unavailable. Severance may be paid over several pay checks, which provides you with salary continuance and a more “regular” tax picture for the year.

8 comments:

Anonymous said...

A work colleague of mine was laid off a few weeks ago. For years he occupied a high position, swaggered arrogantly and preached a condescending exhortation of "Life isn't fair. Deal with it." This is when he held the big end of the stick. Now he occupies no position, walks with humility and begs for a job.

Anonymous said...

Recently I heard that the IRS might consider staggering tax due payments this year if you have been unemployed... Any details?

Jane S said...

If your "arrogant" colleague is looking for a job, then he clearly is "dealing with it".

It is so pathetic to see someone watching someone else's misfortune with such glee. Looks like you are the one swaggering now...

What comes around: Goes around.

Anonymous said...

Jane S, you're so right. Unless their friend is sitting in a corner crying, they're following their own advice to the letter. This commenter does seem to find joy in other's suffering. Sad.

Anonymous said...

Jane S, I am the original poster. I actually am assisting him in finding a new job and he is not "dealing with it" well. I know what it's like to be laid off and much of what I have seen has reminded me not to swagger arrogantly. I take no joy in the loss of his job but I do take delight in his humility. And, thanks for sharing.

Anonymous said...

Jane S.

Your first comment was perfectly appropriate.

"Life isnt fair, deal with it"
"Just do it"
"The one who dies with the most toys wins"

These are all baby boomer catch phrases. Your former colleague is undoubtedly a ranking member of the rotten baby boomer generation.

I love it when they get a taste of their own medicine. The baby boomers are the worst generation ever to come to power in this country. They ruined our nation really. Destroyed our economy which took two centuries to build.

Anonymous said...

So from the Greatest Generation to the Worst Generation in right around a half century.

Congrats Boomers, you've destroyed the country! What'll you think of next?

kfc/Madame Freud said...

I love it when they get a taste of their own medicine. The baby boomers are the worst generation ever to come to power in this country. They ruined our nation really. Destroyed our economy which took two centuries to build.-Anon

Hmmmmmm..seems to be lots of uncalled for, misguided hate out there towards boomers, don't you think? When you look at the ages of the people in the investment firms who have literally undermined the entire system with worthless investment schemes to dupe honest, hard-working people out of their money, one sees a lot of 30-somethings's flitting around trying to make their 'mark' in a fast-paced, greed-oriented environment. A great number of young IT techies profess to know all about systems and how to adapt them to prevent fraud and promote investor confidence yet, don't seem to be able to stop crooks; and young accountants professing to be the new age stars have worked discreditibly to restate standard financial reports to also dupe investors and swindle tons of cash.

IMHO, the country is being sold out from under you all by 'non-boomers' at the stock exchange who think nothing of advising their clients to 'sell, sell,sell'; after all, they earn most of their fees when investors sell , not when they buy. Who monitors the veracity of all their market manipulations? They already have admitted to 'selling naked' in the stock market...selling shares (without even owning them) to force down market prices so they could buy them when they get low enough. Who's to say it isn't still happening?

Many of these boomers founded most of the main corporations out there; their main problem is that they had to be bureaucratic to do so and they don't know how to adjust to a more 'laissez-faire' style of managing.

What is killing the country is the increase in the number of uneducated people in the work force; the people who can't spell or use acceptable grammar let alone realize they can't dress in whatever they feel like wearing when they're out in the workforce. They may be younger than the boomers but they haven't a fraction of the credibility.

Perhaps when the youth of the country decide to hike up their pants, remove the lip studs, cover the depths of their cleavage, drop the intensive use of idioms and 'in expressions' and start remembering their names aren't all 'Anonymous', society will start appreciating their efforts to better the world.