PDF document

- 1 -

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 ﬁle an income tax return in order to claim EITC. Visit
may be having difﬁcult times
www.irs.gov, keywords 1040 Central, for more information on EITC, other
ﬁnancially. 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 ﬁle
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

- 2 -

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 qualiﬁed 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 ﬁling all
required tax returns for your business by the due dates. In addition, if you
Resources
had employees, you must ﬁle 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
products and information
What if I withdraw money from

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

PDF file checksum: 1897863673