According to a CompleteTax survey, you may be overlooking tax breaks that can save you money.
When it Comes to Unemployment, Knowing What’s Taxable, What’s Not Makes a Difference
(RIVERWOODS, ILL., January 27, 2011) – At the end of 2010, 14.5 million people were unemployed and many more were out of work at one time or another throughout the year. As people start to prepare their 2010 tax returns, there are a few things they should know about – and much they don’t – based on findings from the CompleteTax® Tax Breaks for the Unemployed Survey.
“Being out of work is stressful enough and not knowing if you’re getting all the tax breaks you should or being concerned you’re going to make mistakes that may cost you just adds to the stress,” said Gary Lundberg,Product Management Director for CompleteTax. “You want to make sure you know what you can and can’t claim and that you have the right resources to help you make those decisions.”
CompleteTax is providing free Premium-level federal online tax preparation for 2010 income tax returns to anyone who was unemployed for any period of time last year.
The CompleteTax Tax Breaks for the Unemployed Survey of more than 1,000 adults, conducted for CompleteTax by ORC International, found that many taxpayers are not sure which job-search related expenses can be deducted. Many respondents were unable to answer the following True/False statements correctly.
| Answered Correctly | Answered Incorrectly | |
|
62% | 38% |
|
58% | 42% |
|
46% | 54% |
|
44% | 56% |
|
38% | 62% |
|
33% | 67% |
While some taxpayers were able to correctly identify whether or not a few expenses were deductible, only 1 percent were able to correctly identify whether or not all six of these costs related to job search were or were not deductible.
“Tax software such as CompleteTax helps people identify what expenses can be deducted so you can get a bigger refund,” said Lundberg. “But it’s good to understand what deductions can be claimed ahead of time so you can make sure to save receipts and are keeping track of all your expenses.”
The Unemployed Do Have to File Tax Returns and Pay Taxes
The CompleteTax survey also found that many taxpayers are confused about the taxability of unemployment and severance benefits. Specifically, four in ten people do not know that severance benefits can be taxed and 38 percent are not aware that unemployment benefits are taxable.
Nearly one-half of taxpayers were confused about healthcare costs for people who are unemployed, with 44 percent believing incorrectly that anyone who is unemployed can deduct healthcare costs from their taxes. Nearly one-third also incorrectly believed that being unemployed allows people to withdraw from their retirement accounts penalty free. While in some instances, people who are unemployed can take penalty-free withdrawals from their retirement accounts, other criteria also must be met.
Also concerning, 43 percent of taxpayers believe that being unemployed allows someone to delay paying their taxes and one in four believe people who are out of work are exempt from filing an income tax return – neither of which is correct.
Many people were not able to answer the following True/False statements correctly.
| Answered Correctly | Answered Incorrectly | |
|
76% | 24% |
|
68% | 32% |
|
62% | 38% |
|
60% | 40% |
|
57% | 43% |
|
56% | 44% |
Tax and Unemployment Concerns Looking Ahead
In 2010, 39 percent of people surveyed said they had been unemployed for all or part of the year and 86 percent had friends, family or colleagues who also had been out of work.
Looking ahead, people indicate a wide variety of concerns about employment and taxes for 2011 and beyond. Interestingly, while many people are still concerned about their pay or hours being reduced, more people are now concerned about the taxes they may owe than about being laid off.
Specifically, people are concerned about:
|
60% |
|
46% |
|
36% |
|
34% |
|
33% |
However, people continue to be concerned about making certain those who are out of work have unemployment benefits. Most consumers (57 percent) agree that it was appropriate to extend unemployment benefits and 53 percent agree they should be extended further if needed.
Notably, most (55 percent) also agree that more tax relief is needed to get people back to work – even after the major tax package at the end of 2010.
“Many people have experienced joblessness first hand or know people who have,” said Lundberg. “They want to make sure job seekers are getting the support they need.”
Free Tax Prep Options for People Out of Work
Throughout the tax season, CompleteTax is providing free Premium-level federal online tax preparation for 2010 income tax returns to anyone who was unemployed and collected unemployment benefits for any period of time last year. CompleteTax also is offering free Premium federal tax prep for people who switch from TurboTax®, TaxACT® or H&R Block® online. Any CompleteTax federal return is free to anyone owing the IRS on their 2010 return. Additionally, CompleteTax Basic offers free tax preparation for taxpayers using the most commonly used tax forms and schedules.
Survey findings are available at www.cch.com/CompleteTaxUnemploymentSurvey2011.pdf.
About CompleteTax
CompleteTax is the fast, easy and accurate online tax preparation software solution for taxpayers who want the confidence that their taxes are done right and that they’re getting the biggest refund. CompleteTax walks through every step necessary to prepare and file taxes online, including filling out all the right forms. With CompleteTax, taxpayers can either file taxes online (e-file) or print and mail their return. Learn more at CompleteTax.com and connect with us on facebook.com/completetax, twitter.com/completetax and youtube.com/completetax.
CompleteTax online tax preparation and e-filing software for consumers is developed by CCH, a Wolters Kluwer business. CCH (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. Wolters Kluwer is a leading global information services and publishing company (www.wolterskluwer.com).
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