For those who are unemployed and looking for a job, tax season couldn’t have come at a worse time. And if the emotional costs of dealing with unemployment weren’t enough, a prolonged job search can prove to be very costly. Fortunately there are a host of income tax deductions available for those who are actively looking for work.
Expenses that you incur over the course of your job search may be eligible for a deduction against your taxable income. These costs are deductible even if you have a job, regardless of if you actually land the position or not. Armed with some basic tax advice and a little bit of moxie, you too can take advantage of these frequently forgotten tax benefits.
Qualifying expenses generally fall into three categories:
Outplacement & Employment Agency Fees
You are allowed to write off any agency fees that you have paid while looking for a new job within your current field of work. Allowable deductibles may include several employment services such as recruiters, career counselors and job coaches. However, if you find a job and your new employer agrees to pay back these fees, you will need to include the amount received in your gross income up to the amount of the tax benefit of the prior year.
Resume Preparation Costs
This category encompasses an array of expenditures directly associated with applying for a job. Such expenses include the costs of paper, envelopes, postage, phone and fax charges.
Travel and Transportation Expenses
Costs incurred from traveling to and from job interviews may also be tax deductible. Airfare, mileage, lodging and meal expenses — depending on the circumstance — are all examples of charges that may be written off when not reimbursed by the prospective employer.
As highlighted above, there are several different ways to cut down on job search-related costs through tax breaks.
However, the IRS imposes several limitations. For starters, expenses are not deductible for those looking to make a career change into a different field or for first-time job seekers. Others may be ineligible if there is a substantial lapse in time between the last job held and the current job search. Finally, you can only deduct job search expenses if, together with all other miscellaneous deductions, they exceed two percent of your annual adjusted gross income.
For more information, download this PDF, courtesy of the IRS.
