In recent years, countless Americans have fallen on hard times. Economic instability has rocked the US for eighteen months, making the 2007-2009 decline the longest postwar recession experienced by the United States to date. Although the National Bureau of Economic Research announced that the official end of the recession was in June 2009, some fear that our nation will experience a ‘double dip recession’, in which a brief period of growth is followed by a second recession. .

While the chance of this happening may be slim, it pays to be prepared; A recession can affect many different aspects of your finances, of which taxes can play a large role. Here are some things to keep in mind if a future recession causes damage to your current employment situation or income.

-Severance pay, along with pay received for allotted vacation time or sick days, is considered taxable income. Unemployment compensation also falls into this category.

-If you have experienced a reduction in income, tax credits may be available depending on your circumstances. Your eligibility for tax credits is determined by the amount of income and the size of your family.

-If you are actively looking for a new job, deductions may be available for travel, relocation agencies, or other career-oriented consulting fees. This is also a possibility if you have had to move more than fifty miles to find a suitable job.

-Money withdrawn from an IRA before the owner is sixty years of age may be included in gross income, thus becoming taxable.

-Benefits provided by public assistance and food stamps are not taxable.

This is just a brief overview of the possibilities, and more details can be found on the IRS home page.