Job Search Expenses Can be Tax Deductible
Summertime is the season that often leads to major life decisions, such as buying a home, moving or a job change. If you are looking for a new job that is in the same line of work, you may be able to deduct some of your job hunting expenses on your federal income tax return.
Here are seven things the IRS wants you to know about deducting costs related to your job search:
- To qualify for a deduction, your expenses must
be spent on a job search in your current occupation. You may not deduct
expenses you incur while looking for a job in a new occupation.
- You can deduct employment and outplacement agency fees you pay while
looking for a job in your present occupation. If your employer pays you
back in a later year for employment agency fees, you must include the
amount you received in your gross income, up to the amount of your tax
benefit in the earlier year.
- You can deduct amounts you spend for preparing and mailing copies of
your resume to prospective employers as long as you are looking for a
new job in your present occupation.
- If you travel to look for a new job in your present occupation, you
may be able to deduct travel expenses to and from the area to which you traveled. You can only deduct the travel expenses if the trip is
primarily to look for a new job. The amount of time you spend on
personal activity unrelated to your job search compared to the amount of
time you spend looking for work is important in determining whether the
trip is primarily personal or is primarily to look for a new job.
- You cannot deduct your job search expenses if there was a
substantial break between the end of your last job and the time you
begin looking for a new one.
- You cannot deduct job search expenses if you are looking for a job for the first time.
- In order to be deductible, the amount that you spend for job search expenses, combined with other miscellaneous expenses, must exceed a certain threshold. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction. The amount of your miscellaneous deduction that exceeds two percent of your adjusted gross income is deductible.