Tax Deductions for Job Seekers
Finding a job is not only stressful, but it can be expensive too. If you were looking for a job in 2011 then there might be some good news for you after all -- the IRS might owe you! That’s right, if you were on the job hunt last year you might qualify for tax deductions on some of the expenses you incurred while on your search.
IRS Pub 529 Guidelines
To find out if you are eligible for a tax deduction you need to review the guidelines provided by the IRS. Be sure to take a good look at the guidelines before you claim any deductions for your job search. Here are the guidelines which can also be found on the IRS website.
- A tax deduction can only be applied when seeking a job in your current field. For example, you can’t use a tax deduction if you are looking for a job in a completely different profession.
- No deductions are available for first-time job seekers.
- If you took a “substantial break” in between jobs, the IRS will now allow a deduction for this. However, the IRS does not define what a “substantial break” is so you will have to figure that one out yourself.
- There is a limit to the amount you can claim. Deductions are granted only for amounts over 2 percent of your adjusted gross income. This doesn’t sound like much, but every little bit helps.
Here’s What You Can Deduct
Once you have determined you meet the guidelines the next step is to know exactly what can be deducted. The following Income Tax Deductions are allowed on your itemized deductions worksheet:
- Resume and Application Costs: When it comes to your resume there are certain costs you might incur such as: the postage cost or the cost for paper or ink. These are all items that can be deducted.
- Placement Agency Fees: If you used a placement agency to find a job within your current field you may deduct any fees you were charged. Note: If you end up being reimbursed by your employer for these expenses then you must report this as regular income.
- Travel: There are a few eligible deductions when it comes to travel. Keep in mind, the travel must be directly related to looking for a job. The deductions include the mileage you put on your car during your job search, the cost of a flight and the cost for your hotel stay.
- Babysitting: If you needed to hire a babysitter while you were on your job search then that’s a deduction too. Your babysitting fees qualify as deductions - this is great news for parents!
- Moving: If your job search results in you relocating then you can deduct all costs associated with your move. This includes everything from the cost of boxes to shipping charges. You qualify as long as your new job requires you to move 50 miles away.
- Training and Networking: Sometimes looking for a new job requires training to freshen up your skills. Any sort of job event, seminar or training you attend that is directly related to your job search can be a deductible.
- Phone Calls: When searching for a job you can be sure there will be many phone calls. You can deduct the cost of phone calls from a land line or a mobile phone used for the purposes of finding a job. Now, this could get a bit tricky when it comes to your cell phone calls because of the way carriers package their plans. However, the IRS grants a tax deduction and they include mobile phones.
Tax deductions can be tricky and complex. It’s always suggested to seek help from a tax expert before you venture off into unfamiliar territory with your taxes. If you don’t have any experience with these types of deductions then play it safe and get expert advice. Always remember to keep track of your receipts so you have proof you are entitled to the deductions.
Michal Cheney is a personal finance blogger who writes for several top personal finance blogs, such as Dough Roller and Go Banking Rates. She enjoys writing about money management, getting out of debt and planning for retirement. Her practical approach encourages folks to get serious about their relationship with their money.
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