With almost 10% of the United States workforce currently unemployed, the idea of owing money at tax time is downright scary. If you are actively looking for a job, there are a number of tax benefits – including some sizable tax deductions available to you – that should help minimize your tax implications during the upcoming tax season.
Tax Deductions for Job Seekers
Most of the expenses directly related to your job search are tax deductible, provided you are not seeking employment for the first time or trying to find work in a different industry. You may not have thought about the possibilities of tax deductions for job search expenses, because, individually, most of your expenses may not seem like much, but once you start adding them up, you might be surprised at how much searching for a job actually costs you.
If you itemize your tax return, you will be able to claim a deduction for eligible job search expenses that exceed two percent of your adjusted gross income.
Eligible expenses include a wide variety of job search expenses, including, but not limited to:
- Car mileage to and from an interview; parking tolls; highway tolls
- Fees to employment agencies
- Long distance phone calls or faxes to seek employment or send resumes and applications
- Expenses associated with the creation of your resume, printing or mailing of resumes
- Advertisement or classified space in industry trade magazines, job search websites or newspapers
Moving Expenses Associated with a Job Transfer
If your job search efforts result in new employment that requires you relocate, some moving expenses can be deducted at tax time. If your employer is covering relocation expenses, you cannot claim any of those expenses as tax deductions. In order to qualify as an eligible moving expense, your new employment must be more than 50 miles from your current (or primary) residence.
Eligible moving expenses may include:
- Mileage from your current home to your new home; parking fees and road tolls
- Hotels, if needed when traveling from your current home to your new home
- Packing supplies and expenses
- Moving companies
Education Expenses Associated with a New Job
If you decide to return to school to improve your odds of landing a job in your field, you may be able to deduct some of your education expenses. The amount you can deduct will depend on your adjusted gross income, with the maximum deduction of education for job seekers being $3,000.
Tips for Claiming Job Search Expenses on Your Taxes
The tax deductions for job seekers are designed to help cover the costs associated with the job hunt. It may be tempting to add on additional expenses that are not eligible for the deductions, which are very likely to be flagged and caught by the IRS. Make sure you are only including expenses that are directly associated with your job search and save all of your receipts in case you are audited. If you have any questions as to whether or not your expenses are eligible, it is highly recommended that you consult a tax professional.
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Disclaimer: GVA is not an attorney or attorney firm. GVA has partners for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.