Expenses can be deducted even if the job search doesn’t result in a new position being offered or accepted. Some common expenses that can be tax deductions for job searches are:
- Resumes: This can include the price of printing, buying special paper, postage when sending it out, or paying for someone to design it.
- Travel: Local and out of town travel can be deducted as long as it is not reimbursed by the prospective employer. Another determining factor of deductibility is the amount of time spent looking for a job versus personal activity during the trip.
- Employment Agency Fees: These fees are deductible. However, if your employer reimburses you for employment agency fees in a later year, that amount must be included in your gross income.
The IRS has some stipulations to these deductions:
- You must be looking for employment in your current industry. (The IRS considers any job in the private sector to be a new industry for a retired military officer.)
- Job searching expenses for first time job seekers are not deductible.
- The expenses must exceed 2 percent of your adjusted gross income in order to be deducted.
- There cannot be a “substantial break” between your earlier employment and your current search. The IRS does not elaborate on what constitutes a “substantial break” but common causes are raising children, returning to school, etc.
If a searching for a new job was one of your New Year’s Resolutions, or you have further questions about tax deductions for job searches, please contact us.