Job Seekers Can Reap Tax Benefits
When you’re looking for a new job, the last thing you’re thinking about is tax savings. But it is something to keep in mind. Expenses while searching for a new job are considered unreimbursed employee expenses and qualify as a miscellaneous deduction on Schedule A, subject to 2% of your AGI.
Job search expenses are deductible when you are looking for a new job in the same occupation, even if you do not end up getting a new job. Deductible job search expenses include:
- Employment and outplacement agency fees you pay while looking for a job in your present occupation. If you are later reimbursed for these fees, you must pick them up as income.
- Amounts you spend for preparing and mailing copies of your resume to prospective employers as long as you are looking for a new job in your present occupation.
- Travel expenses, if the trip is primarily to look for a new job. The main factor in determining deductibility is the amount of time spent on personal activity compared to the amount of time spent on job search.
Job search expenses are NOT deductible when you are looking for a job in a new occupation, there was a substantial break between the ending of your last job and looking for a new one, or you are looking for a job for the first time.
Changing jobs is an exciting and stressful time. In this hectic time, make sure you save receipts and keep track of expenses so you can reap the benefits on your tax return.