6 Tax Deductions Job-Hunters Can’t Afford to Overlook
When you’re out of work, any help you can get with expenses is more than welcome. Sometimes these gifts come from unexpected sources, such as the Internal Revenue Service. The IRS provides tax deductions for job-hunting expenses that reduce your taxable income and decrease your tax bill. As an added bonus, you can claim them even if you didn’t land a job that tax year. (See also: 16 Great Tax Deductions You May Have Overlooked)
However, there are a few caveats:
- Your job hunting expenses must add up to at least 2% of your total gross income to qualify as deductions.
- You must be looking for work in the same field. Unfortunately, career changers aren’t able to benefit from the government’s generosity.
- People looking for their first job are out of luck, too. You can only deduct job search expenses if you’ve already been employed, even if it was part-time.
- The IRS doesn’t recognize job hunting expenses you incur after a “substantial break” between losing your job and starting your search. While the agency doesn’t provide a specific definition for “substantial break,” waiting months to start your search may be a mistake.
- Most of these deductions allow you to write off the costs in full, but some do have limits. Check with a tax professional if you’re unsure.
The sum of these expenses is listed as a single itemized deduction on line 21 of Schedule A. You won’t have to send in any receipts or other documentation with your return, but make sure you have them just in case the IRS initiates an audit. Without comprehensive records, the IRS may disallow them and make you pay any additional tax you owe.
1. Employment Services
Using employment services can give you a boost in your job search, but the costs can get steep. Luckily, job seekers can deduct the fees associated with employment counseling, headhunters, or other job placement services. You can also deduct the costs of placing job-seeking ads in newspapers or on classified websites. Fees you pay for access or membership to job ad websites are similarly deductible.
2. Resume Preparation
Your resume is the first impression potential employers have of you, and sometimes you need to shell out a good bit of money to get it just right. You can deduct expenses you incur from professional resume preparation services, as well as books that provide resume-related advice and instruction. You can also write off printing and copying costs such as ink and paper, mailing when you send your resume to employers.
Local and long-distance phone calls you make via land line or cell phone to inquire about work or for job interview purposes are deductible. Keep in mind that unless you use the phone service solely for job-hunting purposes, you cannot deduct your entire phone bill. Only the portion of the charges that directly relate to your employment search are eligible. Request itemized bills so you can see exactly when you made the calls, how long they lasted, and how much they cost.
4. Networking and Professional Development
The fees you pay to attend job fairs, seminars, conferences, and other networking events while looking for work are also deductible. You can even write off fees for online networking sites and premium employment services such as those offered by LinkedIn. If you take any classes or training courses to build your skills and make yourself more marketable to employers, you can write off those expenses as well.
Travel expenses can be a little tricky, but if you don’t mind a little math, you should be able to write off a good portion of your costs. The IRS gives job hunters a $0.55 deduction per mile that covers both local and out-of-town driving to job interviews, networking events, and other job-related trips. You can also write off parking fees. If you use mass transportation or travel via air or rail, you can deduct the costs in full. Hotel or other lodging costs are deductible as well. And if you grab a bite to eat while you’re hitting the pavement, whether it’s a fast food breakfast in your car or a lunch interview at a fancy restaurant, you can write off 50%of each meal.
While this last one isn’t actually a deduction, it’s still a huge help for many job seekers. The child and dependent care credit covers up to 35% of your day care or babysitting costs dollar-for-dollar, directly reducing the amount of tax you owe instead of reducing your taxable income. You can only claim expenses that you incurred while looking for a job and you must have the provider’s Social Security or Employer Identification number to qualify.