Tax Deductible Job Search Expenses
With just a few days to go before the April 15 deadline to file income taxes, many are scrambling to get their returns done on time and find some last minute deductions. If you are currently in a job search, you may be overlooking deductions that you are entitled to.
According to a recent survey by The Tax Institute, taxpayers are confused about what qualifies as job search expenses. The survey showed that 40 percent of taxpayers didn't know they could deduct transportation expenses or the cost of help with a resume. Another 17 percent mistakenly believed they could deduct wardrobe purchases.
Amy McAnarney, executive director of The Tax Institute says, "the deductible portion of your expenses must be claimed as a miscellaneous itemized deduction, and along with other miscellaneous itemized deductions, must exceed 2 percent of your adjusted gross income." In addition, as of 2009, you won't be taxed on the first $2,400 of unemployment insurance. McAnarney outlines the following guidelines for deductions and qualifications:
- Employment agency and professional placement services
- Coaching fees
- Resume preparation including printing, postage, long-distance charges, advertising, etc.
- Travel: airfare mileage (some automobile expenses have been approved), meals (based on either actual expenses or standard federal per diem rates) and lodging (actual expenses only).
- Relocation expenses: Taxpayers who relocate because of a new job can deduct qualified moving expenses without itemizing. The new job must be at least 50 miles farther from your prior residence than your old job was from that residence. Taxpayers must remain employed full-time at the new location for at least 39 weeks.
- COBRA payments: May qualify for medical expense deductions.
McAnarney recommends that taxpayers keep track of these job search expenses by saving their receipts and logging mileage and other expenses.
- The job search must be for a job in your current or most recent trade or business and should be at a similar level of responsibility with duties similar to those of your most recent job.
- If you held a college internship or valid job while in college and your search is for a job in the same trade or business, you will be able to deduct job search expenses.
- If you are just out of school and had no paying jobs while in school that were related to your trade or business, your deductions won't be allowed.