Which Job Search Expenses Are Deductible?

The current reality is that changing jobs is common. But for the first time, the dreaded job search now has an advantage: deductions! Job search expenses can be deducted as different itemized deductions if you are looking for a position in the same field, essentially at the same level as the one you left. The expenses are tax-deductible even if you do not get the job.

You can claim reimbursement for job search expenses, provided that the value of all different deductions is greater than 2% of adjusted gross income. Job search deductions are also subject to the general limitation of deductions broken down by AGI limit values. To calculate the deduction on Schedule A, subtract 2% of the adjusted gross income from the total amount of these expenses. Your adjusted gross income (AGI) is the amount shown on line 35 of Form 1040.

When filing your taxes, keep in mind these seven things the IRS wants you to know about the job search cost deduction:

• To be eligible for a deduction, your expenses must be spent on a job search in your current occupation. It is not possible to deduct expenses incurred while looking for a job in a new profession.

• If you are traveling to find a new job in your current occupation, you can deduct travel expenses from the region you traveled from to the region you traveled to. You can only deduct travel expenses if the trip consists mainly of looking for a new job. How much time you spend in a personal activity unrelated to looking for a job, compared to the time you spend looking for a job, is important in determining whether the trip is essential to look for a new job or for personal purposes.

• Job search expenses cannot be deducted if there is a significant difference between the end of the last job and when you started looking for a new job.

• The amount spent on job search expenses, added to other miscellaneous expenses, must exceed a certain limit to be deductible. Use Schedule A, Itemized Deductions to determine your deduction. Job search expenses are reported as a separate itemized deduction. The amount of the miscellaneous deduction exceeding 2% of the adjusted gross income is deductible.

• You can deduct the agency employment and transfer costs that you pay when looking for a job in your current occupation. If your employer reimburses you for an employment agency fee in a subsequent year, you must include the sum you received in your gross income up to the tax benefit from the previous year.

• You can deduct the amount spent preparing and sending copies of your resume to potential employers each time you seek new employment in your current occupation.

• You cannot deduct the cost of finding a job if you are looking for a job for the first time.

Examples of things that cannot be deducted related to looking for a job:

• Computers or other technology (probably used for several job searches).

• Professional attire for a job interview.

• The costs of finding a job in a new profession.

Conclusion

• The job search should be for a job in your current or recent company or business, and you should have a similar level of responsibility with similar duties to the most recent job.

• If you have not worked in that industry or business for a long time, searching for a job in a new industry or business will be considered, but your deductions may not be allowed.

• If you have completed an internship or valid college job and are looking for employment in the same industry or company, you will be able to make the job search deductions.

• If you have just left school and did not have a similarly paid job at school, and you are looking for a job in a new industry or business, your deductions will not be allowed.

• If you are going on a personal trip and looking for work during that trip, only the specific expenses to find employment at the destination will be deducted. Round trip, accommodation, and meals provided are not deductible. Avoid unnecessary vacation trips while searching for a job.

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