If you are looking for a new job you may be able to write off the expenses incurred in your job search! There are, of course, some limitations to these deductions.
First off, you have to itemize in order to take these deductions. That means if you don’t have enough itemized deductions to get above the standard deduction ($11,600 for married couples filing jointly, $5,800 for single filers, or $8,500 for head of household filers in 2011) you will not be able to take advantage of these deductions.
The next thing to consider is that this particular deduction falls under the “Job Expenses and Certain Miscellaneous Deductions” which once totaled up are then reduced by 2% of your adjusted gross income (AGI). This means that if your deductions in this category are not over 2% of your AGI you will not get any benefit from them on your tax return.
The last thing you have to take into consideration before using these expenses as a tax deduction is if the job you are doing your search on is within the same occupation as your current occupation. In order to use this deduction the job you are seeking must be in the same field as your current occupation or your most recent occupation (if you are unemployed) provided there was not “a substantial break between your last job and when you began looking for a new one”. This means if you are looking for your first job you cannot write off the expenses.
So, if you expect to have enough deductions to get over the standard, will have more than 2% of your AGI in this category, and the job you were seeking was in the same occupation what should you be keeping records on as far as job seeking expenses go?
- You can deduct employment agency fees. If your employer then reimburses you these fees you must include the reimbursement in your income.
- You can deduct the costs associated with creating and mailing resumes and cover letters to prospective employers
- You can deduct travel expenses to and from the area you are seeking a job in, but only if the travel is primarily for job seeking and not for personal pleasure.
So, that is job search deductions in a nutshell. If you have any questions or comments about job search deductions go ahead and contact me and I will do my best to respond in a timely manner.
