Looking for a job is work in itself. There's the hustling for interviews, the following up on leads -- and the constant polite smiling and genial small talk as you meet potential employers. That's no easy job.
But you can be rewarded quite nicely for your toil. Sure, there's the long-term rewarding career, but the IRS will also give you some decent deductions if you're spending your hard-earned money looking for work. If you choose to itemize deductions rather than take the standard exemption, you can write off the costs of your job search. Since it's a miscellaneous deduction, it's subject to the 2 percent limit, which means that you have to have combined miscellaneous deductions greater than 2 percent of your adjusted gross income to begin writing them off. But if you qualify, it could pay off.
Let's not get ahead of ourselves though. First, we'll review a few rules about our common job-search deductions.
10: Them's the Rules
Although the IRS has some downright generous deductions for your job search, they do come with strict rules. So let's make sure your job-search expenses qualify before we carry on.
First, your job search can't be in a new occupation. That means two things: It can't be your first job, and it must be in the profession in which you already work. So if you're looking for deductions, now is not the time to abandon your massage therapy career to explore the world of artisan plumbing. (Frankly, there may not ever be a good time for that.)
You also can't have a "substantial" break in employment between your last job and the new one you're searching for. Note that the IRS doesn't provide a definition of "substantial," but better not go running off for a French sabbatical to recharge the batteries if you want to grab those write-offs.
Now that we know you qualify for job-search expenses, let's dive into what you can write off. You should be delighted to know that -- despite being everyone's least favorite job-search task -- your resume is a perfectly acceptable deduction. No, not the cost it took to build your experience and qualifications -- you can't write off the summer you worked the drive-through window at your local fast-food joint. But the usual costs you probably associate with resume preparation are all included in the deductions. Printing, mailing -- heck, if you hire someone to spell-check it -- you can write it off.
Unfortunately, that doesn't mean you can pay someone to agree to pad your resume with fake references and try to deduct the cost. But if someone helps you develop or prepare your resume, by all means mark it down.
8: Employment Placement or Interview Prep
Getting a new job has never been a walk in the park, and finding yourself in an especially turbulent market can be even more daunting. You might realize that simply standing on a street corner and asking for work just isn't going to cut it and decide to hire an employment or temp agency to help place you in a suitable field. These services don't come free, so it can be a difficult decision for some. Accept a leg up for a fee, or risk it -- cheap and alone?
Don't fuss for too long. When you realize that any fees you pay to a person or organization to help you find a job are write-offs, you might be even more excited to get some career help. It doesn't just stop there: Do you fear the moment a potential employer asks you to list your weaknesses? You can also deduct the cost of any interview prep you pay for to learn how to dazzle your interviewers with your spot-on replies.
Even if you do hire some outside help to find new work, that doesn't necessarily mean you get to kick back and let the job offers roll in. You still might find it useful to advertise your services and get your name out there.
While it's probably not wise to take this tax write-off if you hire an airplane to trail your resume and references on a banner in the sky, you can deduct the costs of advertising or marketing yourself for a new job. And now is as good a time as ever to remind you that the IRS isn't crazy; the agency will want to make sure you're spending reasonable amounts on all these job-search costs. (Think more along the lines of "putting an ad in the local weekly," less "paying for a gigantic billboard you can see from the freeway.")
6: Telephone and Legal Services
Even in this digital day and age, a lot of employers will ask you to do a phone interview before they're ready to commit to a day of shaking hands and introducing you around the office. And even that phone call is a write-off, as long as you have some way of keeping track of how much it cost you.
Keep in mind that any calls you make to look for jobs or interview can be included in the job-search deduction. So if you're calling around all over town to see if anyone can use a worker, you can write off the cost. And remember, that might mean phone consultations with a job agency or headhunter, too.
And while it comes after a job offer, don't forget that you can also deduct the cost of a lawyer you hire to look over a job contract -- even if you're just doing an over-the-phone consultation.
More Common Job-search Tax Deductions
5: Computer Costs
As we've noted, there are a lot of online activities you might be taking part in to improve, widen -- or just plain start -- your job search. Although we can't tell you that the brand-new tablet you bought to browse Craigslist ads is entirely tax deductible, there is some good news about the cost of online searching.
If you bought any online software (like JibberJobber) to help organize or advance your job search, you can write it off. Likewise, other computer expenses -- say, if you had to use an Internet café to search online or apply for jobs -- can probably be written off. Of course, join with us in the chorus: You better have records and proof. The IRS won't just take your word that you spent 12 hours in a coffee shop working your fingers to the bone on leads, especially if you're trying to write off four croissants, three mochas and one iced coffee as job-search expenses.
So, you're driving around three counties trying to get your name out there. Maybe you're doing interviews, maybe you're dropping in to employers to ask if they have an opening -- maybe you're just meeting up with folks you know to ask for references for your resume. No matter the case, any gas you spend on job searches can be written off.
Of course, you do need to be pretty strict about your itinerary if you're trying to write off the cost. If you make a detour for frozen yogurt (and you should always assume you will), then you can't include it in the mileage. But otherwise, you can take the standard mileage rate from the IRS. In 2014, that's 56 cents per mile -- not a bad deal, if you're hauling yourself around town [source: Fishman].
3: Traveling to a Job Interview
Here's a great plan: You'll find some job in Hawaii (that you may or may not have any intention of taking) and fly out there for a week-long trip to Waikiki. Sure, the interview is only a 30-minute appointment, but what the heck? It's deductible! Piña coladas for everyone!
Unsurprisingly, the IRS is on to you. While you absolutely can deduct travel expenses for a job search, it's limited to that: the actual searching you do. Now, there may actually be a good reason for you to deduct the transportation or lodging on your trip if it's strictly related to an interview or the like. But you'll need to be very careful about how you're spending your time. Personal time should be at a minimum compared to the time that you're spending traveling or conducting job-search duties.
2: Moving for a New Job
While this is contingent on actually having a job offer in hand, we would be remiss if we didn't bring up one big tax deduction for those with a new job. You can actually deduct the cost of moving for a new work opportunity. Just like job-search write-offs, there are some pretty inflexible requirements, but the payoff will be worth it if you meet them.
One, you have to prove your new job is far away. The rules say it has to be 50 miles (80 kilometers) farther from your old home than the old job was from the place you lived. You also have to work at the new job for 39 weeks during the year after your move [source: IRS 455]. But if you meet those, you can deduct pretty much any of the costs of the move minus food. If you drive or fly, if you have to pay for storage, if you need lodging along the way -- it's all possible. Not only can you deduct your own expense, but you can also include anyone else in your household that moves with you. And yes, that totally includes pets [source: IRS 521].
1: Don't Go Nuts
We've learned about a lot of common -- and possibly substantial -- deductions you can take while you're in the process of looking for work. However, there might be some questions left unanswered, like, "Can I write off the cost of these amazing highlights I got before my important job interview?" or, "Does this super luxurious Italian suit get a write-off because I wore it around town when dropping off resumes?"
Don't push your luck, people. While you can probably get away with choosing a pretty salmon-colored paper instead of boring white stock when printing out your resume, that's probably as far as the IRS is willing to go. While there are a lot of things you might associate with a job search -- the cost of the energy drinks you slam right before a phone interview to sound peppy, perhaps -- they aren't going to cut it, come tax time.
Many Americans don't think about their tax bills until the new year. But there are things you need to do before Dec. 31 if you want to pay less later.
Author's Note: 10 Common Job-search Tax Deductions
It's worth repeating: Any time you're itemizing your deductions, be very careful to keep records and receipts. And remember, itemizing might not even be necessary: If you're not interested in tallying up every expense accrued over the year, consider taking the standard deduction. It might be more worthwhile -- even considering job-search costs.
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