Tax Deductible Job Search Expenses

by Anya Jennings on October 7, 2009

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Searching for a job can be pretty expensive. If you’ve been out of work for a while, just finding gas money to get to interview locations can become an issue. Then there’s that  Zen moment  when you realize that you can deduct some of your job search expenses on your income tax return.

I can see your mind working right now. You’re trying to remember where you put your cell phone bills, and you’re adding up your internet and landline charges. Before you get too excited, remember, this is the government.  There are RULES!

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First, let’s talk about whether or not you qualify. Because you’re going to hate the “same occupation rule.” Basically, you only get to itemize your job search expenses if you’re looking for essentially the same job you already have. If you want to go from programming to administrative project manager, you’re going to have a problem, but you might be able to make a case for an upward adjustment, say from manning the IT helpdesk to programming, since, technically, they both fall under IT. If you want to change careers completely, forget it. No tax perks for you! Fortunately, if you have to take a job at Starbucks cranking out grande half-caf double-shot mocha cappuccinos all day while you search for a real job, it doesn’t count as your actual last job.

What can you deduct?  Unfortunately, the IRS isn’t interested in haircuts, spa treatments, clothing, gym memberships, and manicures. No matter how badly you need to polish those raggedy nails before an important interview, it’s still a personal expense. Totally unfair, I know.

What you can deduct are expenses related specifically to the job search. Employment agency fees, career counseling, resume preparation fees (plus copying and postage), and long distance calls are all fair game. You can also deduct local travel at 55 cents a mile (in 2009).

If your job search extends to other states, you can deduct your travel expenses, including airfare, rental car, hotel, and 50% of your meals. However, this is not a license to vacation. You can’t traipse off for a few weeks to Orlando and drop off a few resumes between Disney and Seaworld. The trip has to be all about legitimate job hunting. Although…interviews don’t usually take all day, so getting splashed by Shamu is not totally out of the question. Just don’t try to write off your park tickets. For the record, theme parks have IT departments, too. Just so you know.

If you plan to deduct expenses, keep detailed records – receipts, a mileage log, copies of bills, and dates of interviews, counseling sessions, or anything else that might be deductible.

And here’s the catch

You can only claim job hunting expenses if you itemize deductions, and that’s only fiscally sound if you have a lot of deductions you can take. Your deductions have to equal more than 2% of your adjusted gross income – which is great news if you have been out of work for so long your income is really low. Well, sort of.

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