{"id":29516,"date":"2024-02-03T10:39:45","date_gmt":"2024-02-03T15:39:45","guid":{"rendered":"https:\/\/blog.eztaxreturn.com\/?p=29516"},"modified":"2024-02-03T10:39:51","modified_gmt":"2024-02-03T15:39:51","slug":"how-your-taxes-will-change-if-youre-laid-off-due-to-the-recession","status":"publish","type":"post","link":"https:\/\/staging.eztaxreturn.com\/blog\/how-your-taxes-will-change-if-youre-laid-off-due-to-the-recession\/","title":{"rendered":"How Your Taxes Will Change if You\u2019re Laid off Due to the Recession"},"content":{"rendered":"\n

The information in this article is up to date for tax year 2023 (returns filed in 2024).<\/em><\/p>\n\n\n\n

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There\u2019s been a lot of talk about a looming recession, and you may be concerned about what that means for you.\u00a0 During a recession, you\u2019re at greater risk of losing your job and the benefits that come with it \u2013 your income, health insurance and retirement savings.\u00a0 Some companies have already started laying off workers and rescinding new job offers.\u00a0 If your employment status changes, your taxes will likely be impacted.\u00a0 Having a lower taxable income may help you qualify for tax credits<\/a> and deductions you were previously unable to claim.\u00a0 Here’s how your taxes will change if you’re laid off due to the recession. <\/p>\n\n\n\n

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What is a recession?<\/strong><\/h2>\n\n\n\n

The National Bureau of Economic Research defines a recession as \u201ca significant decline in economic activity that is spread across the economy and lasts more than a few months\u201d.\u00a0 Some indicators to watch out for are high unemployment rates, lower consumer spending, rising inflation, manufacturing slowdowns and a decline in real gross domestic product (GDP).\u00a0 <\/p>\n\n\n\n

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Unemployment benefits count as taxable income<\/strong><\/h2>\n\n\n\n

Losing your job is stressful, especially when you don\u2019t see it coming because chances are you don\u2019t have enough savings to cover 3 to 6 months of living expenses.\u00a0 The good news is that if you\u2019re laid off or lose your job due to no fault of your own, you may be able to collect unemployment compensation. \u00a0This can provide temporary relief while you look for a new job, but it counts as taxable income<\/a> at tax time.\u00a0 At the beginning of the following year, you\u2019ll receive a 1099-G stating the amount of money you received, and it must be reported on your tax return.\u00a0 To avoid owing money or receiving a smaller refund, request to have taxes withheld from your benefits or make estimated tax payments throughout the year.\u00a0<\/p>\n\n\n\n

Note:<\/strong>\u00a0 If you receive a lump sum severance or get paid for your unused vacation days that income is also taxable.\u00a0 However, welfare and food stamps are not. <\/p>\n\n\n\n

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Earning less money can help you qualify for more tax credits<\/strong><\/h2>\n\n\n\n

Having less taxable income means you may now qualify for the Earned Income Tax Credit (EITC)<\/a> which is a special credit for workers with modest incomes.\u00a0 To qualify for tax year 2023, your AGI cannot exceed:<\/p>\n\n\n\n

Number of children<\/strong><\/td>Single, Head of Household, or Widowed<\/strong><\/td>Married Filing Jointly<\/strong><\/td><\/tr>
0<\/strong><\/td>$17,640<\/td>$24,210<\/td><\/tr>
1<\/strong><\/td>$46,560<\/td>$53,120<\/td><\/tr>
2<\/strong><\/td>$52,918<\/td>$59,478<\/td><\/tr>
3 or more<\/strong><\/td>$56,838<\/td>$63,398<\/td><\/tr><\/tbody><\/table>
Maximum AGI amounts for tax year 2023<\/figcaption><\/figure>\n\n\n\n

Your investment income must also be $11,000 or less.<\/p>\n\n\n\n

Your EITC amount will be based on your income and the number of children you have.  The maximum credit amounts are:<\/p>\n\n\n\n