Job Related Questions  

      ?                         During an Economic Downturn

What if my income declines?
There are many tax credits that are subject to income limitations. If you had    What if?
a reduction in income during the year, you may be eligible for some credits 
or deductions. For example, the Earned Income Tax Credit is available for     The Internal Revenue Service 
working families and individuals. Eligibility is determined by income and     recognizes that many people 
family size. You must le an income tax return in order to claim EITC. Visit   may be having difcult times 
www.irs.gov, keywords 1040 Central, for more information on EITC, other 
                                                                              nancially. There can be a 
tax credits and tax law changes.
                                                                              tax impact to events such as 
                                                                              job loss, debt forgiveness or 
What if I lose my job?                                                        tapping a retirement fund. 
The loss of a job may create new tax issues. Severance pay is taxable.        If your income decreased, 
Payments for any accumulated vacation or sick time are also taxable. You      you may be newly eligible for 
should ensure that enough taxes are withheld from these payments or make      certain tax credits, such as the 
estimated tax payments to avoid a big bill at tax time. Public assistance and Earned Income Tax Credit.
food stamps are not taxable. The IRS has a helpful publication which lists a 
number of job-loss related tax issues. For more information, see Publication  Most importantly, if you believe 
4128, Tax Impact of Job Loss.                                                 you may have trouble paying 
                                                                              your tax bill, contact the IRS 
                                                                              immediately. There are steps 
What if I receive unemployment                                                we can take to help ease the 
compensation?                                                                 burden. You should always le 
Unemployment compensation you received under the unemployment                 a tax return on time, even if 
compensation laws of the United States or of a state must be included         you are unable to pay, so you 
in your income. It is taxable income. If you received unemployment            can avoid additional penalties.
compensation, you should receive Form 1099-G showing the amount you 
were paid and any federal income tax you elected to have withheld. For        This document contains some 
more information, see Publication 525, Taxable and Nontaxable Income.         “What if” scenarios and their 
                                                                              possible tax impact.

What if I am searching for a

new job?
You may be able to deduct certain expenses you incur while looking  
for a new job, even if you do not get a new job. Expenses may include 
travel, résumé and placement agency fees. For more information, see 
Publication 529, Miscellaneous Deductions. Moving costs for a new job at 
least 50 miles away from your home may also be deductible.

                                     Internal Revenue Service

Publication 4763 (Rev. 2-2011)  Catalog Number 53124V  Department of the Treasury  Internal Revenue Service  www.irs.gov

                                           Job Related Questions  

?                                                      Continued

What if my employer goes out of
business or into bankruptcy?                                                     Additional 

Your employer must provide you with a Form W-2 showing your wages and            Topics
withholdings by January 31 of the following year. You should keep up-to-
date records or pay stubs until you receive your Form W-2. If your employer 
or its representatives fails to provide you with a Form W-2 by February 15, 
                                                                                 Recordkeeping:
contact the IRS and we can help by providing you with a substitute Form W-
2. If your employer is liquidating your 401(k) plan, you have 60 days to roll it 
                                                                                 IRS Publication 552, 
over to another qualied retirement plan or IRA. For more information, see 
Publication 4128, Tax Impact of Job Loss.                                        for Individuals

                                                                                 IRS Publication 583, 
                                                                                 for Businesses
What if I close my own business?
If your business is no longer operating, you still are responsible for ling all 
required tax returns for your business by the due dates. In addition, if you 
                                                                                 Resources
had employees, you must le all required employment tax returns, including 
Forms 940, 941, 943 or 944. Both business and employment taxes should 
be paid when due. But, if you are not able to pay in full, contact the IRS 
immediately to discuss your options. For more information, visit www.irs.gov,        Online:
keywords Starting, Operating or Closing a Business.
                                                                                 Visit www.irs.gov for  
                                                                                 the most up-to-date tax 
What if I withdraw money from                                                    products and information

my IRA?
Generally, early withdrawal from an Individual Retirement Account (IRA)              By Phone:
prior to age 59 1/2 is subject to being included in gross income plus a 10 
percent additional tax. There are exceptions to the 10 percent additional        IRS Tax Help Line 
tax, such as using IRA funds to pay your medical insurance premium after         1-800-829-1040
a job loss. For more information, see Publication 590, Individual Retirement 
Arrangements (IRAs).
                                                                                 IRS Forms & Publications 
                                                                                 1-800-829-3676 
What if my 401(k) drops in value?                                                (1-800-TAX FORM)
Generally, you cannot claim a loss on your retirement accounts that are 
already receiving favorable tax treatment. The only time you would have  
a loss is when you receive a distribution that had previously been taxed.  
For more information, see Publication 575, Pension and Annuity Income.

                                     Internal Revenue Service