How Unemployment Tax Benefits Work

Tax Breaks for Unemployed Workers

Being without a job may also qualify you for certain tax breaks, especially if you're married and have kids and you or your spouse work at least some of the year.

The earned income tax credit (EITC), for example, is designed to help individuals and families that work, but don't make a lot of money. It's been touted as helping low wage workers rise above the poverty line, but it also applies to people who get paid at a higher rate, if they get laid off or otherwise don't work for part of a year [source: Marr].

The amount of the credit and tax filers' eligibility for it depend on your income and how many children you have (up to three). In tax year 2014, an individual filer had to earn between $14,590 and $46,997 to be eligible for the EITC and a couple had to make between $20,020 and $52,427. Unemployment benefits don't count for EITC eligibility purposes [sources: Bell, IRS].

The maximum tax credit available for tax year 2014 was just more than $6,143. The EITC is refundable, meaning that you can get the cash if you don't owe the IRS money at the end of the year. It also looks like the size of the credit may jump in the coming years and that the EITC may be tweaked to provide more benefits to single workers who don't have children. One proposal would reduce the minimum age for seeking the EITC to 21 and beef up the max credit available by about $1,000 [source: Marr].

Meanwhile, unemployed parents can still take advantage of child-related tax breaks. That includes the Child Tax Credit, which pays up to $1,000, and the Child and Dependent Care Credit, which can lower your tax bill by up to $3,000 ($6,000 for joint filers) [sources: Tax Policy Center,Center on Budget and Policy Priorities].

Now, let's see how you can write off expenses related to your hunt for your next job.