Tax Tips for Job Seekers
One in an occasional series of articles about your taxes.
If you searched for a new job last year, there may be certain expenses that you can write off on your taxes if you itemize your return. Some expenses are minor, such as postage paid for sending off a resume. Other expenses are much more significant including relocating to a new city at your own expense to start a new job.
Hopefully, you kept track of your expenses last year. If not, pull up your checking account statements and your credit card statements and look for those costs related to job seeking. You’ll need this information for your return, so get started now before you’re ready to begin working on your tax return.
Let’s take a look at some deductions you may be able to take:
Moving expenses — Your found a new job, but unlike in times past, you had no help moving to a new city to start your job. If your move was at least 50 miles away from your previous residence, you can deduct those costs. To be certain that you qualify, the IRS explains what is required to qualify for deductions. See IRS Publication 521 for more information.
Education — The IRS allows you to deduct certain educational expenses provided that: (1) maintains or improves your job skills, or (2) is required by your employer or by law to keep your salary, status or job. Deductible expenses include your tuition, books, lab fees, certain transportation costs and some other related costs including research and typing. Careful! The IRS does not allow you deduct expenses related to qualify for a new trade or business. See IRS Topic 513 for more information.
Headhunter fees — If you hire a recruiter to find a job in your present occupation, the IRS allows you to deduct these costs. However, if your former employer later pays you back for that expense, you’ll need to declare that payback as gross income.
Travel expenses — If you travel to a new area to search for work, you can deduct the costs related to that trip. Careful! If that trip involves personal activity, you cannot deduct that part of your expenses. The primary reason for a trip should be to find a job. An incidental visit to the local opera may be fine, but spending several extra nights at a resort could be a problem.
Resume expenses — If you have someone design your resume, print copies and you incur costs for mailing your resumes, those expenses are deductible advises Jennifer Merritt writing for Reuters. You may also be able to deduct the cost of having someone develop an online resume, but you’ll receipts as you would for your hard copies.
Phones and faxes — Long distance phone calls and the cost of faxing your resume are deductible expenses notes Alison Doyle writing for the About.com “Job Searching: Guide. Make a copy of your phone bill and circle those calls. Keep receipts received for each time you paid someone to fax.
Keep in mind that the IRS states that 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.” When in doubt, consult a tax professional or simply refrain from deducting something that is questionable.