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.
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.
- Bell, Kay. "Writing Off Job-Hunting Costs." Bankrate. March 30, 2009. (Nov. 11, 2014) http://www.bankrate.com/finance/money-guides/writing-off-job-hunting-costs-1.aspx
- Ellis, Blake. "Tax Goodies for Job Seekers." CNN Money. March 5, 2010. (Nov. 11, 2014) http://money.cnn.com/2010/03/05/pf/taxes/tax_exemptions_unemployed/
- Fishman, Stephen. "Tips for Deducting Job Search Expenses." 2014. (Nov. 11, 2014) http://www.nolo.com/legal-encyclopedia/tips-for-deducting-job-search-expenses.html
- Internal Revenue Service (IRS). "Job Hunting Expenses." Aug. 4, 2014. (Nov. 11, 2014) http://www.irs.gov/uac/Newsroom/Job-Hunting-Expenses
- Internal Revenue Service (IRS). "Job Search Expenses Can Be Tax Deductible." July 18, 2012. (Nov. 11, 2014) http://www.irs.gov/uac/Job-Search-Expenses-Can-be-Tax-Deductible
- Internal Revenue Service (IRS). "Publication 521 - Main Content." 2013. (Nov. 11, 2014) http://www.irs.gov/publications/p521/ar02.html
- Internal Revenue Service (IRS). "Topic 455 - Moving Expenses." August 18, 2014. (Dec. 4, 2014) http://www.irs.gov/taxtopics/tc455.html
- Lankford, Kimberly. "When Job-Search Expenses Are Tax-Deductible." Kiplinger. Aug. 5, 2014. (Nov. 11, 2014) http://www.kiplinger.com/article/taxes/T054-C001-S003-when-job-search-expenses-are-tax-deductible.html
- Parker, Tim. "How to Deduct Your Job Search Expenses." Investopedia. April 5, 2013. (Nov. 11, 2014) http://www.investopedia.com/articles/personal-finance/040513/how-deduct-your-job-search-expenses.asp
- Rossheim, John. "Your Job Search Expenses May Be Tax-Deductible." Monster. 2014. (Nov. 11, 2014) http://career-advice.monster.com/job-search/getting-started/job-search-expenses-tax-deductible/article.aspx
- TurboTax. "Can I Deduct Job Search Expenses?" Intuit. 2014. (Nov. 11, 2014) https://ttlc.intuit.com/questions/1899475-can-i-deduct-job-search-expenses
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.