April is indeed the cruelest month, even more so for the unemployed. Let's say you've been out of work for months or even a year, waiting in line at every overstuffed job fair and subscribing to every overlooked job board. The only money coming in the door is an unemployment check from the government, a fraction of your regular salary and not nearly enough to cover the mortgage, the credit card bill and the groceries. But then April 15 comes along, and the Internal Revenue Service (IRS) kicks you while you're down.
Yes, even the unemployed have to file and pay income tax. Cruel, cruel, cruel. But there is some good news. If you're savvy about tax deductions and credits, you can significantly lower your tax burden and even escape the grasp of the taxman until you're back on payroll.
Read on for our five essential tax tips for the unemployed. We'll start with a necessary evil: filing income taxes.