Don't think you're off the hook with Uncle Sam just because you're collecting unemployment benefits. All the 2011 unemployment benefits you've received will be taxed as income. And if you haven't been withholding your taxes, you may end up with a big tax bill come April.
If you're still unemployed this year, you might want to withhold your taxes by using the Form W-4V to voluntarily request that a flat 10 percent tax be withheld.
Even with the unexpected bill, the unemployed can cash in with several job search tax breaks. They include travel expenses, cost of printing, mailing, and creating a resume, job placement agency expenses, and more. There are several limitations to this tax break, and you'll qualify for it if you are looking for a job in the same field and if you've previously held a job.