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Did You Know Job Hunting Expenses are Deductible?

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If you’ve never been unemployed you don’t know how much time and expense is involved with finding a new job. As a business owner I know firsthand that following up on leads could take up an entire work day and for those people looking for a new job, the costs associated with job searching not only add up fast but when the money coming in is minimal, the costs become even more noticeable.

The IRS understands this and for that reason, most of the expenses associated with a job search can be written off as deductions assuming the taxpayer is able to itemize their deductions. How does it work and what are the rules surrounding these deductions?

Miscellaneous Expenses

Job search expenses fall under the category of miscellaneous expenses. Before you can claim any of these expenses they have to exceed 2% of adjusted gross income. Remember that any severance pay you receive counts as income so if you and your spouse claim $50,000 in income you won’t see any benefit for the first $1,000 in expenses. If you’re subject to the alternative minimum tax you won’t be eligible for any write offs.

Not Just Any Job Search

If you were once a teacher and have decided to follow your dream and be a personal trainer, you won’t be able to write off any job search expenses. The IRS only allows you to write off expenses for job searches in your current field. They also don’t allow write offs if you have been out of work for an extended period of time but they don’t specify how long.

Finally, remember that job search expenses are a deduction and although every little bit helps, you will receive a deduction equal to your tax rate. If your tax rate is 25% and you have $1,500 in deductions, you’ll get $375. A nice sum but proof that relying on a deduction to cover all of the expenses is inaccurate.

What can I Deduct?

Now that we have the rules out of the way, what types of expenses can you deduct? Here’s a partial list:

  • Job search website subscription fees
  • Career coaching
  • Resume writing services
  • The paper and the ink you purchased to print your resume
  • Mileage (.51 cents per mile for the first six months and 55.5 cents for the second six months of 2011)
  • Hotels and lodging related to your search
  • Internet costs
  • Child Care
  • Continuing education
  • Moving costs- (must be more than 50 miles from your previous residence)

As always, if you plan to deduct job search expenses, you have to be an impeccable record keeper. Receipts and other documentation related to each expense will be required if the IRS asks for proof of the deductions.

The amount of money spent looking for a new job can be sizable. The IRS allows you to deduct those expenses once they surpass 2% of your adjusted gross income. Read this IRS publication for detailed information about writing off these expenses.

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5 Responses to “Did You Know Job Hunting Expenses are Deductible?”

  1. Jeremy says:

    It’s good that they give a tax deduction for this, but the 2% of income stipulation is weak. Who actually spends that much on a job search unless you are already wealthy and going for a high paying gig. The people who need this deduction just wouldn’t qualify.

  2. Tim,
    You mentioned that your deduction is equal to your tax rate. But are there greater deductions for service members or veterans who are looking for work? That is, can service members and veterans seeking a deduction for job hunting expenses receive a deduction above their tax rate?

    Thank you.

    -Christian L.

  3. QuestionAsker says:

    Can you deduct expenses for a job search if you are employed? What if I am searching for a better job (got my masters, so time to move on)?

  4. timparker says:

    Smart Military

    First, thank you for you or your family member’s service to our country. When I researched the article, I didn’t find anything but to be fair, I wasn’t looking for that. I found the below article that doesn’t mention anything extra but that doesn’t mean that there isn’t. My best advice is to do some hunting on the IRS website or call.

    Thanks for your question

    Tim

    http://www.military.com/veteran-jobs/content/career-advice/on-the-job/how-to-deduct-job-expenses-from-taxes.html

  5. timparker says:

    Questionasker:

    I believe the answer is, yes you can. I included an article below. EHow is generally considered a bad reference but when I was getting my start as a writer, I did some work for them. They make you cite every fact you state so I have a little more confidence in their information than some. I’m sure you can find more information on the IRS website.

    Tim

    http://www.ehow.com/info_11414721_can-claim-job-search-expenses-am-employed.html


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