Job Search Expenses Can be Tax Deductible

Tax deduction

Job hunting can be frustrating, time-consuming and can also be expensive. The two biggest expenses that incur will most likely be the costs of constructing and mailing out your resume, and fees charged by job placement agencies. The good news is, both of these expenses qualify for a tax deduction. Here are some eligible job search expenses:

Resume Preparation
According to IRS almost all expenses that are related to your resume can be deducted. This includes hiring a professional to edit and format your resume or purchasing a professional resume template, as well as the cost of paper, printing, and postage. Make sure to keep all of your receipts and maintain records of where you send you resume.

Phone Calls
Have you had phone conversations with potential employers that are 45 minutes or longer? Speaking to a potential employer over the phone is deductible. If you spend 45 minutes speaking with an HR representative, a portion of the cost can be reimbursed, whether you get the job or not.

Employment and Outplacement Agency Fees
If you have used a job placement agency in your job hunting, those fees are tax-deductible, provided that you have not been reimbursed by the employer or anyone else for those expenses.

Gas/Mileage
If you must travel a substantial amount for interviews, mileage for those trips are tax deductible. In 2014, the standard mileage rate is 56 cents per mile for business-related purposes. Keep a log of how much you’re driving to interviews, job fairs, or employment-related training seminars, even if you’re not traveling very far per trip. Many other traveling expenses are deductible as well as moving costs, if you have to move to a new region.

Before Claiming for the Deduction, Consider These Factors

Before you go all out pimping your resume with professional help, make sure you meet these following requirement:

The 2% AGI Limit
It is important to keep in mind that, not all of your job seeking expenses are deductible. In fact, you can only claim the amount of expenses that is more than 2% of your adjusted gross income.

The Job That You Are Looking for Must Be in The Same Occupation
Career changers don’t get the cut. For example, you can’t go from being a waiter and go out to look for a job as a teacher, that won’t cut it. However, if you need to take a part-time job to support yourself while you look for a job in your field, you can take deductions related to the part-time job search.

Taking Substantial Break Between Jobs
You can’t take substantial break between your previous job and your job search. There’s no specific time frame provided by the IRS. If for any reason you have to take a long break from work and years later you decide to go back to work, that would be too long to qualify for job search deductions.

You Can’t Be Looking for Your First Job
Unfortunately, you must have been previously employed in your career field. Students seeking entry level job cannot deduct job search expenses.

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