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.
To qualify for a deduction, your expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation. The following are examples of deductible expenses:
- Employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you received, up to the amount of your tax benefit in the earlier year, in your gross income.
- Fees for career counseling
- Resume preparation costs, such as typing, printing and mailing.
- If you travel to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area to which you traveled. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity unrelated to your job search compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. Thus, it is advisable to keep a contemporaneous log of your activities during the trip, as well as receipts for your expenses.
You cannot deduct your job search expenses if there was a substantial break between the end of your last job and the time you began looking for a new one or if you are looking for a job for the first time.
To deduct job search expenses, you must itemize your deductions. If you use the standard deduction, you get no benefits from job search expenses. The deduction is also part of your miscellaneous itemized deductions, which are allowed only to the extent they exceed 2% of your adjusted gross income. So, depending upon whether you have other miscellaneous deductions, the job search expenses may be further limited. Miscellaneous itemized deductions are not allowed at all if you are taxed by the alternative minimum tax (AMT), so to the extent you are taxed by the AMT you receive no benefit from job-seeking expenses.
If you have questions related to job-seeking expenses or how they fit into your taxes, contact the Tax Experts at Henssler Financial: experts@hensslerl.com or 770-429-9166.
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
