By A.J. Gross, C.P.A., E.A.
Looking for a new job? Did you know you may be able to write-off certain job hunting expenses?
You can write-off job hunting expenses if you are looking for job in the same occupation. An example would be a teacher searching for a teaching position at a new school. You can’t write-off job hunting expenses for a job search in a new occupation. For example, a teacher would not be able to write-off job hunting expenses for finding a new job as computer programmer.
You can’t write-off job hunting expenses for finding a job for the first time. An example would be a college graduate finding a job in their area of interest. The college graduate is searching for a job for the first time.
Finally, you can’t write-off job hunting expenses if there was a substantial break between the end of your last job and the time you started looking for a new job.
The IRS provides several examples of the type of job hunting costs that can be deducted on your tax return. This includes travel, building a resume, and job placement costs. You may be able to deduct the cost of traveling when searching for a new job. This would include driving to and from the area. To write-off the travel costs, the main purpose should be for a job search. There are some exceptions to this rule.
You can deduct the cost for building a resume. You hired a consultant to help you develop the resume. The costs for printing copies of the resume and costs for mailing resumes are considered job hunting expenses.
If you hired a job placement agency, you may be able to deduct the fees for hiring the agency.
All job searching expenses reimbursed by the new employer are not deductible. For example, you are teaching at a school in Lansing, MI. You decided that you like find a teaching position in Grand Rapids, MI. You paid a total of $1,000 in job hunting expenses. This includes travel to and from Grand Rapids, MI and fees for hiring a job placement agency. Your new employer agrees to reimburse you $750 for your out-of-pocket job hunting expenses. You may write-off $250 of job hunting expenses on your tax return. $1,000 – 750 = $250.
Job hunting costs are deducted on Schedule A of your tax return. The deductible job hunting costs are considered a miscellaneous deduction subject to the 2% adjusted gross income (AGI) limit.
A.J. Gross, C.P.A., E.A. is President of ALG Tax Solutions. A.J. Gross can be contacted at AJGross@algtaxsolutions.com.
This column was printed in the October 5, 2014 - October 18, 2014 edition.