Deductible Job Search Expenses
Sometimes a little investment is needed to find that “just-right” new job. While some of the expenses seem small individually, they can mount up in a hurry. There’s postage, costs for printing résumés and work samples, even travel if your job search takes you out of town.
The good news is that those expenses may be deductible from your income taxes.
We say “may,” because your situation has to fit the IRS's restrictions.
In the Same Groove
First, your job search has to be within your current occupation or line of work. If you’re in sales now, looking for a management position might be a good career move, but it won’t qualify for a deduction. The job search deduction also apples to travel expenses, provided the majority of your trip was used to look for work in your current occupation or career. Your job search expenses are deductible even if you didn’t actually land a new position.
Second, job search expenses are included under the umbrella of miscellaneous deductions. That means you can claim the amount of total expenses that’s more than 2 percent of your adjusted gross income. Also included within that 2% are tax preparation fees, a whole slew of unreimbursed job expenses, and some rather rare expenses that are detailed in the Schedule A Instructions.
Also, job search expenses are an itemized deduction, so they can't be deducted if you take the standard deduction. To deduct them on your 1040.com return, enter on our Job, Tax Preparation and Other Expenses screen, line 23. Our interview will guide you to the screen, or you can just search for it.
There are a couple of instances that won’t qualify for the deduction. If you’re searching for your first full-time job, or if there has been a “substantial” period of time between your old job and your job search, the deduction is not available.
If your search is within your current occupation, you can deduct:
- Employment and placement agency fees
- Expenses for preparing and mailing résumés and related materials to prospective employers
- Travel and transportation expenses if the purpose of the trip is primarily to look for a new job in your existing occupation. Even if you can’t deduct the travel costs if the trip is mainly for purposes other than a job search, you can deduct your job search expenses incurred while on your trip.
How do you judge if the trip is “primarily” for a job search? If you spend more time looking for work than you do for any other purpose, the trip is considered primarily a job search.
You can choose to use either the actual expenses, or the standard mileage rate for your vehicle expenses. The standard rate was 54 cents per mile for the 2016 tax year.