Many Deductions for Job Seekers
by Cheryl Avery
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In the recent whirlwind of economic changes, many Americans are experiencing the biggest lifestyle change they've ever faced: the loss of a job or career. If you're spending your summer months updating your resume or attending career fairs in hopes of finding a job, you may be able to deduct some of those expenses on your tax return.
Here are seven tips from the Internal Revenue Service about deducting costs related to your job search:
- To qualify for deduction, the expenses must be for a job search in your current occupation. You may not deduct expenses incurred looking for a job in a new occupation.
- You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If our employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
- You can deduct amounts you spend for preparing and mailing copies of your resume to prospective employers, as long as you are looking for a new job in your present occupation.
- If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
- You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
- You cannot deduct job search expenses if you are looking for a job for the first time.
- The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
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