Tax tips for the unemployed

WASHINGTON (AP) - Tax time can be a painful time for many of us, and it's especially tough for people without jobs. If you're unemployed, there are a few twists and turns in the tax code that can work to your benefit.

Traditionally, every penny of unemployment insurance is taxed. But with 8.4 million job losses since the start of the recession, that rule is changing this year. If you received unemployment checks last year, you can exclude the first $2,400 when you file your return. This benefit won't be around next year. You can avoid a "penalty tax" on IRA and 401(k) withdrawals if you took the money out to pay for medical expenses. If you've been laid off and you're 55 years or older, you can take money out of your 401(k) without penalty.

If you itemize, you can deduct job-hunting expenses. But there are rules. Your deductions must exceed 2 percent of your adjusted gross income. Here are some things you can deduct: resume printing costs, postage, long-distance calls and faxes, travel expenses, including airfare, taxis or tolls.

Make sure to hold onto your receipts here. And don't forget that you can also deduct your medical expenses - if those expenses exceed 7.5% of your adjusted gross income. So hold onto drugstore receipts, prescription orders or co-pay information.