Looking For a Job? The IRS Wants to Help!

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With so many people being out of work or working part-time hours, the job market is being flooded with applicants.

Summer seems to be the season for job hunting. I receive a ton of announcements and advertisements for career fairs, resume services, and headhunters during the summer – although since the economy has tanked, I get them all year long!

Due to this fact, the IRS has released a list of tax benefits for job seekers. So, while our Senators debate another unemployment extension, see if you qualify for any job search deductions.

Here are several of the highlights:

You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year 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.
You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only 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 looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
To qualify for a deduction, the expenses must be spent on a job search in your current occupation.

So, be sure to save all records of any of these job hunting expenses. Don’t forget things such as printing and copying your resumes, paying headhunters and agencies, and even travel costs.

Here are some things to keep in mind when attempting to claim these expenses:

You may not deduct expenses incurred while looking for a job in a new occupation.
You cannot deduct job search expenses if you are looking for a job for the first time.
You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.

So, in order to deduct job search expenses, it can’t be your first job search and it can’t be in a new field. Of course, just to complicate things, the IRS does not go on to specify what a “substantial break” actually is.

To find out more about deducting job search expenses, see IRS Publication 529.

To find out more about tax credits, deductions, and tax planning, visit our tax center: http://knsfinancial.com/taxes/

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photo credit: nidhug