Were you out of work for all or part of tax year 2015? That can be tough on the mind, the body, and the budget. One silver lining: If you looked for a job in your current profession, you may be able to deduct job search expenses.
Job search expenses are included with your other miscellaneous deductions, which must add up to 2% of your adjusted gross income (AGI). These tax deductions are reported on Schedule A with Form 1040. (Don’t forget that your AGI may include unemployment compensation, severance pay and advances taken on your 401K or other retirement plans.)
So, what are deductible expenses? When you’re job hunting in your current occupation, you can include:
- Online job search fees. If you paid a service, such as flexjobs.com, to assist in your job search, you may be able to deduct those fees. Same goes for your LinkedIn premium account. If it’s the only way to obtain job information, it could qualify as the cost of placing an ad.
- Employment and outplacement agency fees. These fees are not deductible if an employer pays them directly to the employment agency, or if they are repaid to you.
- Resumes. Searching the old-fashioned way? You can deduct expenses for preparing and mailing resumes and query letters to prospective employers. This could include the cost of special stationery used for resumes, cover letters and thank-you notes.
- Travel expenses. It costs money to get to and from job interviews, so the IRS allows this deduction. Keep careful records, such as a mileage log. The standard mileage rate is 56 cents per mile. Certain out-of-town expenses, such as airfare or train tickets, may be deducted as long as the trip is primarily to seek a job and those expenses are not being reimbursed by a prospective employer. It’s important to document the time spent looking for a job and the amount of time spent on vacation or other pursuits in these cases.
- Legal fees. You can deduct legal fees related to doing and keeping your job. This could apply if you were downsized or laid off, and you retained an attorney to fight a non-compete clause.
- Moving expenses. If you were successful in finding a job in your current profession last year, congratulations! If you had to relocate, you may be able to deduct certain moving expenses, including transportation, cost of storage, travel and lodging. However, the cost of meals cannot be claimed. Also, the move must be more than 50 miles from your previous home and reside in the area at least 39 weeks of the last year. You will need to complete Form 3903 (Moving Expenses) and attach it to your Form 1040.
There are also certain job search expenses that the IRS does NOT consider deductible. You cannot deduct expenses if you are looking for a job in a new occupation, if you’ve taken too long to start your job search, or if you are looking for your first job out of high school or college.
By Denise Bridges