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Unemployed? At Least Your Job Search is Tax-Deductible

Last week, the National Bureau of Economic Research announced that the recession ended in June 2009. According to the announcement, the economic downturn reached a plateau that month and hasn’t decreased since then. In other words, we are now on the painfully slow journey to recovery.

The end of a recession doesn’t mean that economic suffering is over; rather, it just means we’re making headway towards reaching our normal economic capacity. As we walk the gradual path to recovery, Americans will still be out of work and struggle to make ends meet.

Luckily, if you’re on a job search because of the recession, you could receive some tax breaks on your return this year.

Job Search Tax Deduction Rules

There are a few rules to be aware of relating to job search tax deductions:

  • The tax write-offs for job search expenses are only deductible if you are looking for a new job in the same line of work that you previously worked in. You cannot deduct expenses related to looking for a job in a different career field.
  • If you lost your job and procrastinated too long on looking for a new one, you cannot deduct the related expenses.
  • If you are just starting a job search for your very first job, you cannot deduct the associated expenses.
  • Finally, all of the deductions listed below—with the exception of the moving expense deduction—are miscellaneous deductions and you must itemize to claim them.

Read on to find out which tax deductions you should look for come tax time.

Tax Deductions for a Job Search

Employment and Outplacement Agency Fees

Agencies that help you on your job search—whether it’s lining up interviews or helping you through the application process—can prove to be very helpful in locating your next employment opportunity. While job-searching may be new to you, they are experts and can help you find a job more quickly than you might be able to on your own. However, the agencies don’t work for free. You’ll likely pay a fee if you use their services, which you can deduct on your tax return. If you land a job and your employer reimburses you for the fees, you’ll need to include the reimbursement in your income for the next year.

Resume Fees

Any fee associated with the creation, revision, and dissemination of your resume is tax deductible as a miscellaneous itemized deduction. If you hire someone to help you prepare and revise your resume, the expenses should be deductible. Costs of paper, ink, mailing, and other printing costs are also tax deductible.

Phone Calls

Many employers are opting to interview potential candidates over the phone. This type of interview can become expensive if you are applying for several positions and if the phone calls are long-distance. Keep records of the amount of time you spend on the calls and you can deduct these expenses on your return.

Travel and Transportation Fees

While some of us may travel across the city for an interview, many others will travel across the country for an interview. If your potential-employer is not covering your transportation costs, you can deduct them on your taxes. Be careful when combining pleasurable activities with your job search travel or your expenses may not be deductible. If the majority of the time on your tip is spent on job-searching related activities, you should be able to deduct the costs of the trip.

Moving Expenses

When you do land a job after all of your searching, you might have to move for your new job. Luckily, if you move a certain distance from your old job for your new job, the expenses related to moving are deductible on your tax return. Out-of-pocket costs like transporting your belongings and lodging along the way are both deductible. The great thing about this deduction is that you do not have to itemize to claim it.

Remember…

When searching for a new job in these troubling economic times, know that Uncle Sam will allow you to deduct some of the expenses you incur during your efforts. And now that the recession has been deemed as over, maybe the job search will start to look a lot less bleak in the months to come.

About Amber Gilstrap

Amber is a twenty-something CPA from Kansas City, Missouri who loves writing, working out, and---of course---finding fresh ideas for saving money. Follow her on twitter @ambergilstrap.

Comments

  1. “If you are just starting a job search for your very first job, you cannot deduct the associated expenses.”
    This is very upsetting to me. I graduated in May and have had 10-15 interviews since I first started seeking full-time employment (last October). I estimate that I have spent somewhere between $500-700 for application and interview expenses, all of which have turned up as dead ends. Also, since I do work over 40 hours a week between my 3 part-time jobs, I know I will probably actually owe some taxes this year as some of my employers are probably not withholding enough. It is sad that none of the expenses I have incurred can be written-off (or otherwise covered by a decent-paying job which I am still lacking).

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