Are Job Hunting Expenses Deductible?

Aug 24, 2014 By Nielsen Law Group In Taxation No Comment Tags : , , , ,

Job hunting is becoming a norm in these roller-coaster economic times. Something that used to only be associated with high school or college graduation has now become something we all may have to face, and possibly more than once. And with the tight job market, job hunting can become expensive.

The IRS claims that many of the expenses can be deducted. But there are strings. Here are key facts to know about job searches and taxes:

  1. Same Occupation – expenses incurred while searching for a job in your current line of work are generally deductible. But if you’re looking to change occupations, those expenses may not always qualify.
  2. Résumé Costs – Costs of preparing and mailing/delivering your résumé are deductible.
  3. Travel Costs – To deduct the cost of the travel to and from the area, the trip must be mainly to look for a new job. You may still be able to deduct some costs if looking for a job is not the main purpose of the trip.
  4. Placement Agency – You can deduct some job placement agency fees you pay to look for a job.
  5. First Job  – You can’t deduct job search expenses if you’re looking for a job for the first time.
  6. Work-Search Break – You can’t deduct job search expenses if there was a long break between the end of your last job and the time you began looking for a new one.
  7. Reimbursed Costs – Sometimes your current employer or another 3rd party may reimburse you for the costs of a job search. Reimbursed expenses are not deductible.

Job search expenses are usually deducted on Schedule A under the Miscellaneous Deductions section and must be more than 2% of your Adjusted Gross Income to be deductible – that’s the biggest “string”.

In many situations, these requirements actually preclude someone from getting any benefit from the deductions. With good tax planning, it is usually possible to avoid the facade of deductible job search expenses. So if you’re anticipating you’ll need to make a search or find yourself already in that position, it’s probably time to visit with your tax professional about options. Call us to schedule your free consultation by calling (480) 888-7111 or submit a web request here.

By: Evan A. Nielsen