If Unemployed, Do You Still Have to File Taxes?

By Deanne Katz, Esq. on February 04, 2013 | Last updated on March 21, 2019

It's hard enough being unemployed, but the thought of having to file taxes when you have no income seems downright cruel.

But sadly, being unemployed isn't necessarily a free pass to avoid filing your taxes. Don't act too surprised. There are reasons the IRS isn't a very popular government agency.

Even if you didn't have a job in last year, it's a good idea to file taxes despite the emotional sting. You could take advantage of some tax benefits for people who are unemployed. And depending on your circumstances, you may actually owe some tax money.

Any Source of Income Counts

The first thing to remember is that any income you earned during the year counts. Even if you were unemployed for 11 months, you could still owe taxes on that one month of work.

The other reason you might have to file taxes is because of unemployment benefits. If you collected them, the IRS considers it income. (When you collect unemployment there's an option to prepay your taxes. But few people do that, so they're stuck paying come tax time.)

That's the bad news for people who are unemployed. The good news is that there are specific tax credits you might be able to take advantage of.

Tax Deductions for Job Seekers

Job-seeking or recently employed taxpayers may be able to itemize deductions for costs associated with looking for a job. That can include referral fees, travel associated with a job search, and moving expenses if your new job is 50 miles or more from the old one and you work there for at least 39 weeks.

Sadly this doesn't apply to all job seekers. It's only available to people who recently lost a job and are looking for a position in their previous field.

It's worth noting that itemized deductions might not be worth more than the standard deduction for you. You may also get stuck paying the alternative minimum tax if your deductions put you in a too-low tax bracket.

Tax time isn't pleasant for anyone, but getting audited is even less fun. So don't ignore your tax responsibilities, even if you were unemployed last year.

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