If you are one of the millions of Americans hunting for a job, the IRS may be on your side. As long as a taxpayer is seeking a job in his or her current profession and can file a Form 1040, some job search expenses may be tax deductible and claimed as a miscellaneous deduction.
What Can Be Claimed
The IRS allows the following job-hunting expenses to be claimed as deductions:
- Online job search fees
- Employment and agency fees
- Costs of resume printing
- Costs of mailing resumes
- Legal fees related to doing and keeping your job
- Some travel expenses to and from job interviews
Typically, travel expenses to and from the job interviews are deductible. You can claim the standard mileage rate of 57.5 cents for the round-trip mileage to the interview.
Taxpayers may also deduct travel expenses, such as airfare or train tickets. It's important to document the time spent looking for a job and the amount of time spent on vacation or other pursuits in these cases.
There may be other job expenses a taxpayer can claim due to layoffs. If legal fees were paid to fight a non-compete clause, a taxpayer may claim the expenses as a job-related expense.
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What Can't Be Claimed
Some expenses are not allowed as job-hunting expenses. If a taxpayer just graduated from college and is seeking a first "real job," the expenses cannot be deducted.
Additionally, taxpayers cannot deduct the expenses of looking for a job in another field, or if the taxpayer has taken too long to start the job search.
Some employers offer "income aid packages" to aid employees who lose their jobs because of lack of work. If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment, according to the IRS.
Moving Expenses Distance and Time Test
On the flip side, if your job search is successful and you land a job in your current profession, you may also be able to claim moving expenses.
Taxpayers should complete Form 3903 Moving Expenses, and attach it to their Form 1040. Allowable moving expenses include transportation, cost of storage, travel, and lodging expenses. However, the cost of meals cannot be claimed and the move has to be over 50 miles.
You also have to be aware of something called the time test for claiming moving expenses. For that you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. For self-employed individuals, the time test is 78 weeks of full-time work in the first 24 months of moving.
If you're hunting for a job, you know that every penny counts, and every tax break adds to your pennies. Enjoy the journey!