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What Kind of Tax Credit Do We Get if My Husband Is Unemployed?

No specific tax credits exist for married, unemployed persons. The Internal Revenue Service (IRS) does, however, waive penalties for Individual Retirement Account (IRA) early withdrawals and retirement account hardship adjustments if certain criteria are met. The reduction in income faced by most married couples with an unemployed spouse may also qualify the family's return for additional tax credits.

  1. Earned Income Credit

    • The Earned Income Credit (EIC) allows working taxpayers with annual income below IRS established maximum earnings to claim a credit that offsets a portion of Social Security and Medicare taxes. At the time of publication the earnings maximum for a couple filing a joint return starts at $18,470. Earnings of $48,362 are the maximum for claiming an EIC. A taxpayer must have four qualifying children and file a joint return to claim the credit with this level of income. If your husband is unemployed for a large portion of the year, you may qualify for this credit. If you and your husband have children, you may qualify for a child tax credit.

    Education

    • If your husband pursues a professional certification or degree while unemployed, he can claim the non-refundable Lifetime Learning Credit of up to $2,000 per tax return. Unlike the American Opportunity Credit that can only be claimed four times by a student pursuing an undergraduate degree, the Lifetime Learning Credit may be claimed an unlimited number of times. An additional $4,000 in education expenses may be reported as a deduction in the "Adjusted Gross Income" section of your tax return on the line "Tuition and Fees." (References 3 and 4)

    Hardship Distributions

    • Your husband's retirement plans may not provide for hardship distributions, but if they do, the IRS allows the penalty-free distribution of funds. The IRS further dictates that 401(k) withdrawals must be used to cover immediate, heavy expenses such as medical bills, payments necessary to prevent a home foreclosure or rental eviction, funeral costs, principle residence acquisition expenses and home damage repairs. A hardship distribution on your husband's accounts is not allowed if your assets are great enough to cover emergency expenses.

    IRA Withdrawals

    • IRA funds are usually penalized at a rate of 10 percent for early withdrawals, but there are certain exceptions to this rule. If your husband has been unemployed for over 12 consecutive weeks, IRA funds may be used to cover the costs of health insurance premiums for your husband, yourself and your children. You must still pay income tax on the funds withdrawn. Only the penalty is waived.

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