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Tax Deductible Job Search Expenses

page1-185px-Form_1040,_2011.pdfAccording to the IRS, you can deduct certain job search expenses, even if you don’t get a new job. (See IRS Publication 529 for details.)

One group of deductions that many people overlook is job search expenses. But there’s an important limitation. These deductions only apply if

1) you are looking for a job in the same occupation (i.e., you are an accounting clerk and are looking for another job as an accounting clerk) ,

2) have not had a “substantial break” from the end of your last job in that occupation and are searching for a new one


3) this is not your first job.

If all of these apply to you, then you should include the following expenses on your 2010 IRS Form 1040 (Schedule A) under miscellaneous deductions.

Resume Preparation.

Whether you’ve hired someone to write or update your resume or if you’ve done it yourself, all expenses are deductible. This includes the price someone

charges to write your resume PLUS postage and any stationery you print the resume on. Just be sure you have receipts.

Outplacement  and Employment Agency (Recruiter) Fees.

If you were fortunate enough to get outplacement services provided by your employer, you’re not eligible to deduct anything. Or if your new employer pays the employment agency fees directly, there’s nothing you need to do.

But if you used an employment agency or recruiter where you paid the fees, that fee may be deductible.

If your new employer pays you back, you must include that amount as “gross income” up to the amount of the benefit deduction you took. (See IRS Publication 525 for details.) In other words, if you get paid back, you don’t get the deduction.

Travel and Transportation

When you travel to look for a new job, including unreimbursed interviews, you can deduct travel expenses. These include air fare, hotel, and taxi or car rental fees. If you happen to be out of town on vacation or visiting family and look for a job (in your current occupation) while you’re there, you can deduct the expenses you have from looking for a job. This is probably just mileage. The standard rate for business mileage is $.50 per mile. Be sure to note the odometer readings at the start and end of your trips to recruiters, agencies, interviews, etc. (See IRS Publication 463 for details.)

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