The Best Tax Deductions for Job Seekers

“Tax experts say diligent record-keeping to keep track of expenses and pre-planning your job-hunt activities when you travel are key since you’ll need to prove your expenses were primarily job-search related if you — yikes — happen to be selected for an audit. Here’s a look at what you can deduct and how to keep track:

Career coaching: If you use a coach primarily to bolster your efforts to find a job in your field, the fees are deductible. That session you used to work on achieving balance in your life or to decide whether to switch careers, is not. Keep records and notes about each meeting and claim costs associated with sessions directly related to improving the outcome of your job search.

Travel and transportation: Did you drive to a job interview 50 miles away? Fly three states away and spend two nights in a hotel — on your own dime — for informational interviews? Deductible. For mileage (reimbursed at a rate of 50 cents per mile), write down the date, miles driven and job search-related purpose on the day you travel, advises Perlman. Guessing later can prove problematic. Airfare, hotel bills, and rental car costs associated with traveling for your search are deductible. So are meals on those trips. Log the date and purpose and save the receipts for those expenses. Do the same for tolls, parking and taxi trips related to your hunt. They’re deductible, too.

A word of caution: If you travel to Orlando with the primary purpose of two days worth of informational interviews, but your family flies joins you for two extra days at Disney, deductions are murky. Your roundtrip airfare is usually deductible, says Eva Rosenberg, an enrolled agent and the brains behind tax advice website TaxMama.com. Keep a log of your time and the expenses devoted to job-hunting; if the job search was the primary reason for the trip and not an afterthought, those are deductible.

Conferences: “Finding a job has to be your primary intent” to deduct expenses, says Perlman. If the main reason you attend a professional conference or trade show is to further your job search — maybe you know the networking events are famous for yielding job interviews later — your associated expenses (from conference fees to travel) are deductible, says Rosenberg. Keep a log of costs and how you spend your time in case you’re asked to prove your intent.

Networking events: Deductibility depends on why you attend. “It’s right on the borderline,” says Perlman. “There has to be some proximate connection between what you are doing and getting a job.” Rosenberg says that’s not as hard to prove as it might sound; there’s plenty of research about the importance of networking to a job search. Translation: The deduction survives an audit, if you keep a log and detail how attending relates to your search — or to a business purpose, which counts as a miscellaneous deduction.

Childcare expenses: Experts disagree on this one. But Rosenberg says if you keep clear records — a calendar that designates which hours you used a sitter for job-search related activities, like an interview or job fair — it’s a legitimate deductible expense.

Phone bills. You’ll need to show you incurred an extra expense, says Perlman. If you have a plan that allots you a certain number of minutes and charges you for extra time, those 30-minute calls to a recruiter or hour-long phone interviews might push you over the limit. Add up job-search related calls on statements where you incurred extra charges. You can deduct the overage related to the search, says Rosenberg.

The rest: Keep receipts for stamps; envelopes; copying charges and paper costs for printing your resume, cover letter or other materials for your job search; faxing costs at your local Kinko’s; cost of attending a job fair (that includes any entry fee or transportation expenses); and any other items you think might be related to your job search. A tax pro can tell you what counts, if you have the receipts.”

Source: http://blogs.reuters.com/reuters-money/2011/04/06/the-best-tax-deductions-for-job-seekers/

 

Straight from the IRS:

“Job Search Expenses

You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if:

  • You are looking for a job in a new occupation,
  • There was a substantial break between the ending of your last job and your looking for a new one, or
  • You are looking for a job for the first time.

 

Employment and outplacement agency fees.    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation.
Employer pays you back.   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. See Recoveries in Publication 525.
Employer pays the employment agency.   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income.
Résumé.   You can deduct amounts you spend for preparing and mailing copies of a résuméto prospective employers if you are looking for a new job in your present occupation.
Travel and transportation expenses.   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area.

You can choose to use the standard mileage rate to figure your car expenses. The 2010 rate for business use of a vehicle is 50 cents per mile. See Publication 463 for more information on travel and car expenses.”

The Best Tax Deductions for Job Seekers

“Tax experts say diligent record-keeping to keep track of expenses and pre-planning your job-hunt activities when you travel are key since you’ll need to prove your expenses were primarily job-search related if you — yikes — happen to be selected for an audit. Here’s a look at what you can deduct and how to keep track:

Career coaching: If you use a coach primarily to bolster your efforts to find a job in your field, the fees are deductible. That session you used to work on achieving balance in your life or to decide whether to switch careers, is not. Keep records and notes about each meeting and claim costs associated with sessions directly related to improving the outcome of your job search.

Travel and transportation: Did you drive to a job interview 50 miles away? Fly three states away and spend two nights in a hotel — on your own dime — for informational interviews? Deductible. For mileage (reimbursed at a rate of 50 cents per mile), write down the date, miles driven and job search-related purpose on the day you travel, advises Perlman. Guessing later can prove problematic. Airfare, hotel bills, and rental car costs associated with traveling for your search are deductible. So are meals on those trips. Log the date and purpose and save the receipts for those expenses. Do the same for tolls, parking and taxi trips related to your hunt. They’re deductible, too.

A word of caution: If you travel to Orlando with the primary purpose of two days worth of informational interviews, but your family flies joins you for two extra days at Disney, deductions are murky. Your roundtrip airfare is usually deductible, says Eva Rosenberg, an enrolled agent and the brains behind tax advice website TaxMama.com. Keep a log of your time and the expenses devoted to job-hunting; if the job search was the primary reason for the trip and not an afterthought, those are deductible.

Conferences: “Finding a job has to be your primary intent” to deduct expenses, says Perlman. If the main reason you attend a professional conference or trade show is to further your job search — maybe you know the networking events are famous for yielding job interviews later — your associated expenses (from conference fees to travel) are deductible, says Rosenberg. Keep a log of costs and how you spend your time in case you’re asked to prove your intent.

Networking events: Deductibility depends on why you attend. “It’s right on the borderline,” says Perlman. “There has to be some proximate connection between what you are doing and getting a job.” Rosenberg says that’s not as hard to prove as it might sound; there’s plenty of research about the importance of networking to a job search. Translation: The deduction survives an audit, if you keep a log and detail how attending relates to your search — or to a business purpose, which counts as a miscellaneous deduction.

Childcare expenses: Experts disagree on this one. But Rosenberg says if you keep clear records — a calendar that designates which hours you used a sitter for job-search related activities, like an interview or job fair — it’s a legitimate deductible expense.

Phone bills. You’ll need to show you incurred an extra expense, says Perlman. If you have a plan that allots you a certain number of minutes and charges you for extra time, those 30-minute calls to a recruiter or hour-long phone interviews might push you over the limit. Add up job-search related calls on statements where you incurred extra charges. You can deduct the overage related to the search, says Rosenberg.

The rest: Keep receipts for stamps; envelopes; copying charges and paper costs for printing your resume, cover letter or other materials for your job search; faxing costs at your local Kinko’s; cost of attending a job fair (that includes any entry fee or transportation expenses); and any other items you think might be related to your job search. A tax pro can tell you what counts, if you have the receipts.”

Source: http://blogs.reuters.com/reuters-money/2011/04/06/the-best-tax-deductions-for-job-seekers/

 

Straight from the IRS:

“Job Search Expenses

You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if:

  • You are looking for a job in a new occupation,
  • There was a substantial break between the ending of your last job and your looking for a new one, or
  • You are looking for a job for the first time.

 

Employment and outplacement agency fees.    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation.
Employer pays you back.   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. See Recoveries in Publication 525.
Employer pays the employment agency.   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income.
Résumé.   You can deduct amounts you spend for preparing and mailing copies of a résuméto prospective employers if you are looking for a new job in your present occupation.

Travel and transportation expenses.   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area.

You can choose to use the standard mileage rate to figure your car expenses. The 2010 rate for business use of a vehicle is 50 cents per mile. See Publication 463 for more information on travel and car expenses.”

Submit a Comment

Your email address will not be published. Required fields are marked *