In this tough economy, a lot of people are looking for jobs, or for one reason or another have just quit their job. If you've spent some time and effort — and money — on your job search this year, you might be eligible for a few tax breaks.
Indeed, many of the expenses that you are likely to incur during a job search are tax-deductible.
Can You Deduct That Job Search Expense?
Before you get excited, though, you need to be aware of the caveats. First of all, you can't deduct job search expenses if you have had a long break since your last job. So, if you were laid off, and then unemployed until your benefits ran out, you aren't going to be able to take the tax breaks. You need to be actively looking for a job within a short period of time after leaving your last job if you want the tax deductions.
Also, you can't deduct expenses if you are looking for your first job, or if you are changing careers. You have to be searching for a job in the same field, and you can't be fresh out of college.
If you meet the qualifications, you can start adding up the expenses related to your job search. Some of the qualifying expenses include:
- Travel: If you fly or drive to another city to look for a job, you can count those expenses. Travel expenses include flight, mileage, hotel costs, and even a portion of networking meal costs. However, if you take a day trip somewhere fun, those expenses aren't deductible. Make sure that you only deduct the travel expenses directly related to your job search and the interviews you participate in.
- Fees paid to employment agencies: If you pay a head hunter, career coach or employment agency a fee to help you find a job, you can deduct those costs. However, you do need to be careful. If your employer reimburses you for your employment agency expenses, you can't take the deduction. If you take a deduction in one tax year, and your employer reimburses you in another tax year, you are supposed to report the reimbursement, up to the amount you deducted, as part of gross income.
- Resume services: If you pay fees to have a professional help you with your resume, that is tax deductible.
- Printing and mailing costs: Costs associated with printing your resume and mailing it out, or mailing other application materials (such as cover letters and letters of recommendation), can be deducted when you prepare your tax return.
- Calls: If you make phone calls to potential employers, and you incur costs to call them, you can deduct those expenses.