Friday, October 2, 2009

October Tax Tip

Taxpayers who wish to utilize the mark-to-market election for their trading activities need to make this election no later than April 15, 2010, to be valid for the 2010 tax year.

It is made by attaching an election statement to your 2009 tax return. If you are filing later than this date with an extension, be sure to attach the statement to the extension so that this election is not missed for 2010 taxes. Many active stock traders come out ahead in taxes by making this election.

Thursday, October 1, 2009

Unemployment Tax Breaks

With rising unemployment showing no signs of ending anytime soon, the following will discuss some of the current tax breaks for those who find themselves looking for new employment.

Unemployment Benefits

While these benefits normally equate to taxable income, for 2009 the first $2,400 of unemployment benefits are not taxable.

Job-Hunting Expenses

The costs associated with seeking employment can be deductible, as long as you are looking for employment in the same type of trade or business. These are NOT deductible for first-time job seekers. Deductible expenses include employment agency fees, advertisements, resume costs, job counseling and referral services, postage, travel expenses and automobile costs.

Moving Expenses

If you need to move to obtain employment, the costs associated with the move may be tax deductible. These expenses include travel (but NOT meals) and the costs of moving household goods and personal effects. For purposes of this tax deduction, you must change job sites, move at least 50 miles (computed by calculating the miles from the old house to the new job, which must be at least 50 miles more than the distance from the old house to the old job) and actually work at the new location for at least 39 weeks in the 12 months following the move. For those who are self-employed, the time is doubled to 78 weeks in 24 months.

Education credits

If you need additional education, there are tax credits available to cover some or all of the costs associated with the tuition and related expenses.

Retirement Plan Distributions

You may be able to avoid an early withdrawal penalty (10% in addition to income taxes due) if you tap into retirement plan savings to assist until new employment is found. This issue can be quite complex and many plans differ on what is permitted, so it is usually best to consult with your specific plan to see what is permitted.

Health Insurance

You are permitted to extend your health insurance for up to 18 months under the COBRA program (for yourself and family coverage). Please note, however, that you may be responsible for paying for some of the premiums here.