The days of starting out at one company after college and working for that firm all of one's life are largely over. Now, many people switch jobs several times over the course of their lives, whether it's to earn more pay, take advantage of new opportunities or simply enter a new industry. Each time individuals make a significant career change, however, they should consider how the move will impact their taxes.
For example, individuals who are securing their first job or simply switching jobs may be eligible to deduct their moving expenses. Workers are permitted to write off the cost of job-related moving expenses assuming they meet certain tests outlined by the Internal Revenue Service. First, the new job must be at least 50 miles farther from their old home than their previous job was. Second, employees must work full-time for at least 39 weeks during the first 12 months immediately following the move. Individuals should keep in mind, however, that they don't necessarily have to work at the same job during the 39 week threshold to qualify for the deduction.
Workers who are switching jobs, but remaining in the same field, may also qualify to deduct their job searching expenses. Several items may be written off on their taxes, including the cost to print and mail résumés, fees paid to an employment or outplacement agency and travel costs associated with the job search. However, in order to take this deduction, filers must itemize their taxes, and treat these costs as miscellaneous expenses. In addition, this tax break only applies to those who are seeking out work in the same field they are currently employed in. This means that first-time job seekers are ineligible for the tax break, as are those who are seeking to enter a new industry.
Working from home offers tax breaks as well
In recent years, many people have started their own businesses, and those who lost their jobs during the recession may have chosen to work as independent contractors to make ends meet. As such, there is also a lucrative tax break for those who are self-employed and work from home: a home office deduction. This write-off enables self-employed individuals to deduct several expenses relating to running their office, including rent or mortgage payments (only for the amount of space used), office equipment, utilities and furniture. In order to qualify, however, the space must be used "exclusively and regularly" for business purposes. Individuals who are unsure whether they qualify for this deduction may benefit from speaking with their tax preparer before claiming the write-off.
For a more in-depth look at Liberty Tax Service, visit the Give Me Liberty! Magazine. Follow Liberty Tax on Facebook and on Twitter or contact Liberty Tax directly at 1-877-at-Liberty.