The Career Spectrum Blog

Your Job Search Might Be Tax Deductible

Posted on: February 1, 2010

The following information might not apply to all situations described. Please consult your professional tax preparation service to see what associated expenses, if any, qualify for a federal tax deduction.

A lot of people scoff at the idea of paying to have their résumé professionally prepared or in employing an agent to help them with interviewing skills, job search strategies, etc. because they feel it’s a waste of money. However, that initial investment you make in your career can actually save you money in the long-term by way of a tax break from the federal government.  

According to IRS Publication 529, which governs the tax deductibility of job search expenses, you can deduct certain expenses incurred in looking for a new job in present occupation, even if you do not get a new job. These expenses can be claimed as miscellaneous itemized deductions on Schedule A (Form 1040).

Job seekers can claim the amount of expenses that is more than two percent of their adjusted gross income. A full listing of deductions subject to the two percent limit can be found in IRS Publication 529.

You cannot deduct these expenses if:

  • You are looking for a job in a new occupation;
  • There was a substantial break between the ending of your last job and looking for a new one, or;
  • You are looking for a job for the first time.

Specific expense deduction information includes:

Employment and Outplacement Agency Fees. You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation.

However, if your employer pays you back for employment agency fees in a later year, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year.

If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income.

Résumé Services. You can deduct amounts you spend for having your résumé prepared (written and/or typed), plus printing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation.

Travel and Transportation Expenses. If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct your travel expenses to and from the area (including mileage or airfare, hotel and meals).

You may choose to use the standard mileage rate to figure your car expenses – this figure  changes each year so please see IRS Publication 463 for more information on travel and car expenses.  

For more information about the tax deductibility of résumé services, visit www.irs.gov.

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