Taxed Out? Unemployment and Your Tax Return

If you’re unemployed, the last thing you need is a tax bill due April 15.

You’ve been laid off, and money is tight. The last thing you need is a surprise tax debt due April 15. But it can happen just when you’re least prepared to manage it.

Your 2008 taxes are probably behind you, but for anyone laid off in 2009 or worried it might happen to them, it’s already time to start thinking about your 2009 taxes.

A layoff can change everything about your income and your tax exposure. Transactions like severance, unemployment payments, health care and your 401(k) can help you or hurt you in ways you might not expect.

Ladders’ Taxes and Unemployment Checklist is a guide to the most common pain points that can cause you tax trouble and potential complications.

Among those tax complications, contract work has its own set of rules. Reporter Kevin Fogarty uncovers particular hurdles for anyone who considers freelancing to make extra cash during a layoff.

And Barry Rosenberg, a certified public accountant, shares some calming advice for anyone worried about paying the bills and avoiding tax trouble or wasting the nest egg — cut yourself a break and keep the lights on before you worry about anything else, Rosenberg said.