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Your Search can be Rewarding

Today’s reality is such that changing jobs is commonplace. But for once the dreaded job-search now has an upside: Deductions! Employment search expenses can be deducted as miscellaneous itemized deductions if you’re looking for a position in the same field, at essentially the same level as the one you left. The expenses are deductible even if you don’t get the job.

You can claim job-seeking expenses as long as the amount of all miscellaneous itemized deductions is more than 2 percent of your adjusted gross income. Job seeking deductions are also subject to the overall limitation on itemized deductions based on AGI threshold amounts. To figure your deduction on Schedule A, subtract 2 percent of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 35.

What job hunting deductions can be taken?

  • Employment Agency Fees:
    • If your new employer repays your agency fees, you must include the amount in your gross income up to the amount of the deduction you claimed earlier.
    • If your employer pays fees directly to the agency and you have no responsibility for them, you do not have to include them in your gross income.
  • Resume Preparation:
    • Typing and printing
    • Postage
    • Toll telephone calls
    • Advertising
    • Photographs (if required for your resume in your trade or business)
  • Travel for Your Job-Search:
    • Airfare or mileage (In some circumstances actual automobile expenses have been approved)
    • Lodging
    • Meals (based on either actual expenses or standard federal per diem rates)
  • Legal Fees Protecting Employment Status

Useful Job Hunting Tips:

  1. Your 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.
  2. If you have not held a job in that trade or business for an extended length of time your job search will be considered for a new trade or business and your deductions may not be allowed.
  3. 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 take the job search deductions.
  4. If you are just out of school and had no similar paying jobs in school, you are looking for a job in a new trade or business and your deductions will not be allowed.
  5. If you take a personal trip and happen to do some job hunting while on that trip, only the expenses specific to the job hunt in the destination location will be deductible. Travel to and from the location and lodging and meals while there will not be deductible. Avoid unnecessary job-hunting trips to vacation spots.

Please consult your tax advisor for details or visit Nazaire & Co.