DALLAS – Summertime is the season that often leads to major life decisions, such as buying a home, moving or a job change. If you are looking for a new job that is in the same line of work, you may be able to deduct some of your job hunting expenses on your federal income tax return.
"Folks who have lost their jobs and who spend time updating résumés and attending career fairs should look into the possibility that they may qualify for a deduction," said Clay Sanford, an IRS spokesman in Dallas. "Although most people probably aren't thinking about their next tax return while they're on the job hunt, it's important to remember to keep records that will give you the information needed to figure the deduction--hold on to canceled checks or account statements and receipts."
The expenses must be spent on a job search in your current occupation to be deductible. You may not deduct expenses incurred while looking for a job in a new occupation.
Employment and outplacement agency fees you pay while looking for a job in your present occupation are deductible, but if your 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 usually deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation," Sanford added.
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. However, you can only deduct the travel expenses if the trip is primarily to look for a new job. Job search expenses are not deductible if there was a substantial break between the end of your last job and the time you begin looking for a new one.
In order to be deductible, the amount that you spend for job search expenses, combined with other miscellaneous expenses, must exceed a certain threshold. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction. The amount of your miscellaneous deduction that exceeds two percent of your adjusted gross income is deductible.
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).