Job Search Expenses Can be Tax Deductible

Summertime is the season that often leads to major life decisions, such asbuying a home, moving or a job change. If you are looking for a new job that isin the same line of work, you may be able to deduct some of your job huntingexpenses on your federal income tax return.

Here are seven things the IRS wants you to know about deducting costsrelated to your job search:
1. To qualify for a deduction, your expenses must be spent on a jobsearch in your current occupation. You may not deduct expenses you incur whilelooking for a job in a new occupation.

2. You can deduct employment and outplacement agency fees you pay whilelooking for a job in your present occupation. If your employer pays you back ina later year for employment agency fees, you must include the amount youreceived in your gross income, up to the amount of your tax benefit in theearlier year.

3. You can deduct amounts you spend for preparing and mailing copies ofyour résumé to prospective employers as long as you are looking for a new jobin your present occupation.

4. If you travel to look for a new job in your present occupation, youmay be able to deduct travel expenses to and from the area to which youtravelled. You can only deduct the travel expenses if the trip is primarily tolook for a new job. The amount of time you spend on personal activity unrelatedto your job search compared to the amount of time you spend looking for work isimportant in determining whether the trip is primarily personal or is primarilyto look for a new job.

5. You cannot deduct your job search expenses if there was asubstantial break between the end of your last job and the time you beginlooking for a new one.

6. You cannot deduct job search expenses if you are looking for a jobfor the first time.

7. The amount of job search expenses that you can claim is limited. Todetermine your deduction, use Schedule A, Itemized Deductions. Job search expensesare claimed as a miscellaneous itemized deduction and the total of allmiscellaneous deductions must be more than two percent of your adjusted grossincome.

Please contact us if you have questions or want to determine if your expenses are tax deductible.

Links:

• Schedule A, Itemized Deductions (PDF)
• Publication 529, Miscellaneous Deductions (PDF)