Friends are you frustrated. Don't worry just follow some tips. If you lost your job in 2012 how do you handle that on your taxes? From unemployment payments to job hunting expenses, reporting it all to Uncle Sam can get complicated. Gal Time got some great tips to make it a little less complicated from the accountants at the Massachusetts Society of CPA's. 1. Is My Severance Package Taxable? If you are let go and receive severance pay from your former employer, that pay is considered taxable income. It will be included on your W-2 form and your employer will withhold taxes on it. Similarly, if your former employer compensates you for the value of any accumulated vacation or sick days, or other types of leave, that compensation is also taxable. (Be aware that even companies that go out of business or declare bankruptcy must report your wages and withholding and send you a W-2 form that shows all your income earned.) Of course, you will also have to pay any taxes due o...