Is Your Job Search Tax Deductible?

Resumes — and that fancy resume paper — cover letters, follow-up calls, e-mails.

Just the thought of searching for a job can be exhausting. With all these necessary items and “things to do,” organizing a job search can be stressful, and this doesn’t even include the cost of the hunt.

Fortunately, you can ease the financial burden when you file your 2009 taxes. “Job-hunting expenses are treated as miscellaneous itemized deductions, and they must exceed 2% of your itemized deductions,” says Dennis N. Middleton

, CPA, and founder of his eponymously named accounting firm.

Eligibility

Different job, same field. These tax deductions can only be claimed by job seekers who are looking to change jobs, not career fields. So, if you’re a lawyer looking to venture into marketing, chances are you won’t qualify.

Too much time between jobs? Too late.

According to IRS Publication 529 on miscellaneous deductions, if there was a “substantial break” between the ending of your last job and looking for new one, you do not qualify to deduct your expenses. But the IRS doesn’t define the length of this “substantial break,” Middleton says. “I think it’s somewhat subjective.”

Recent grad? Out of luck. Recent grads may not be able to benefit from this break from Uncle Sam since first-time job seekers can’t deduct their expenses, according to the IRS.

Deductions

Agency fees. You

can deduct employment and outplacement agency fees incurred during your search. But, if in a later year, your employer reimburses you for those employment agency fees, you must add that amount to your gross income.

Résumé. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers.

Travel and transportation expenses. You can deduct travel expenses for trips that are primarily to look for a new job. The amount of time you spend on personal activity compared with 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. Be sure to keep track of mileage, and room and board expenses.

For more information, check out the IRS’ Publication 529.

Related Reading

What to Do Today to Prepare for This Year’s Taxes

Renita Burns is the editorial assistant at BlackEnterprise.com.