Tax Deductions & Credits for Part-Time Work

Taxpayers can claim deductions and credits on Form 1040.

Part-time workers can face little or no tax obligation when filing their taxes if they take advantage of federal and state tax credits and deductions. In some cases, part-time workers can actually receive a tax refund even if they paid no income tax. Tax deductions lower the amount of income that a worker pays income tax on, while tax credits reduce a worker's taxes dollar for dollar.

Federal Credit

The federal Earned Income Tax Credit (EITC) provides low-income and part-time workers with a refundable tax credit. The amount of the credit depends upon the income of the worker, his marital status and the amount of children he has. For the 2011 tax year, a single filer with no children can receive up to a $464 EITC and cannot earn more than $13,660 throughout the year from employment income to qualify, according to the IRS. In addition, claimants cannot earn more than $3,150 in investment income per year in order to claim the credit.

State Credit

If they qualify for the federal EITC, residents in 22 states, the District of Columbia, and Montgomery County, Alabama can also apply for a state EITC as of 2011, according to Tax Credit Resources. Workers in Washington state will qualify for a state EITC in 2012. States may refund the tax credit if a part-time worker owes no or little income tax. State-earned income tax credits range from 3.5 percent of the taxpayer's federal credit in North Carolina and Louisiana to 35 percent of the federal EITC in the District of Columbia.

Employment Expenses

Part-time workers can deduct from their federal adjusted gross income (AGI) most out-of-pocket expenses related to their employment, including the costs of uniforms, work clothes, education, tools and supplies used in the course of employment and union dues. In order to claim these expenses, workers must be required to purchase these items in order to obtain or maintain employment. Individuals can only deduct these costs until these expenses exceed 2 percent of their adjusted gross income.

Transportation

Part-time workers who use their vehicle solely in the service of employment can deduct the total cost of operation on their federal tax returns. Workers who use their vehicle for both employment and personal use can deduct the actual cost of their expenses or they can take a standard deduction of 51 cents per mile for the 2011 tax year if their employment takes them outside of their metropolitan area on a temporary basis, according to the IRS. Individuals cannot take a deduction for regular commuting costs, but they can deduct all travel expenses related to finding a job.

References

• IRS.gov: States and Local Governments with Earned Income Tax Credit; June 2011
• Tax Credit Resources: State Earned Income Tax Credits; 2011
• IRS.gov: Preview of 2011 EITC Income Limits, Maximum Credit Amounts and Tax Law Updates; January 2011
• IRS.gov: Topic 514 - Employee Business Expenses; February 2011
• IRS.gov: Business Use of Car; February 2011