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5 Tax Tips for the Unemployed

        Money | Taxes

4
You Can Deduct Job-Hunting Expenses
Looking for work can be a full time job, so the IRS gives the unemployed a break on expenses related to the job search.
Looking for work can be a full time job, so the IRS gives the unemployed a break on expenses related to the job search.
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In a tight employment market, looking for work can be a full-time job. First, you need to draft the perfect resume, which often requires the paid services of an employment consultant. Then you need to get that resume into the hands of the right people, which could require a paid subscription to a targeted job-hunting and networking site. And what if the best job prospect is in another state? You might need to fly out to Topeka for first, second and third interviews. All of those costs add up -- and you don't even have a job yet!

The good news is that you can deduct a portion of your job-hunting expenses as an itemized deduction. Job-hunting costs are categorized as miscellaneous deductions by the Internal Revenue Service (IRS), which means they're only deductible after they exceed 2 percent of your adjusted gross income [source: Bell]. With your regular salary, that would be tough. But if you were unemployed for most of the tax year, it doesn't take as much to exceed 2 percent.

The hidden gem of job-hunting deductions is moving costs. What if the bottom fell out of the job market in your hometown? If you move at least 50 miles away from your old job location to find work, you might be eligible to deduct a portion of the moving expenses. We say "might," because there are some qualifiers. Once you find a job in the new location, you must remain employed as a full-time worker for a minimum of 39 weeks of the next 12 months to deduct moving expenses [source: IRS]. The coolest thing is that moving expenses is that you don't have to itemize deductions to claim them, and you don't have to exceed a minimum percentage of your gross income either.

The only bad news is that you can't deduct the cost of a new suit or haircut for that job interview in Topeka [source: Block].


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