If you’ve been laid off or are unemployed and can’t find a job, here are a couple of thoughts to help cushion the blow to your cash flow.
1. File for unemployment benefits
If you do get laid off, file for unemployment right away. Don’t wait. Filing for unemployment is tough because it carries a fairly negative stigma of defeat, so a lot of people avoid filing (like me for example, the last two times I got laid off), but really – don’t wait. Getting unemployment payments is way better than watching your bank account dwindle.
Also, the chances are you’ve been paying into your state and federal unemployment insurance funds already. When someone “files for unemployment,” they’re basically submitting a claim to that state or federal unemployment insurance fund. If they’re deemed eligible for unemployment benefits, they will be paid out on that claim (like you would be paid out on a claim you filed with your auto insurance company after an accident). So, in one sense you’re just getting your money back – no shame in that.
2. Write off job-hunting expenses
You can deduct job-hunting expenses on your tax return if you meet a few qualifications. First, you need to itemize your deductions. If you don’t own a home, you probably don’t itemize your deductions (though some do, like if you paid a lot toward medical care or charitable contributions). Second, you can only deduct job hunting costs as miscellaneous expenses if you itemize, but only if your total itemized deductions are more than 2% of your adjusted gross income. So, be sure you save all your receipts for job hunting expenses and talk with a tax professional to verify whether you meet all the requirements to qualify for the deductions.
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