Job Search Expenses May be Deductible

Some Americans find themselves pounding the pavement in quest of a new job, whether they've gotten the pink slip or expect to get one soon. The good news: The search may help you cut your tax bill because under certain circumstances, job-hunting expenses are tax deductible.

New job, same field

First, your hunt for new work must be in the same field in which you're currently or were formerly employed. Uncle Sam won't help out if you decide to totally switch career gears.

Second, you can't decide to chill out for a while and then expect the IRS to help when you decide it's time to get back on the career track. Deductions aren't allowed for employment-search costs when there is a "substantial break" between your last job and when you begin looking for a new one.
Finally, recent graduates are out of luck. The costs you incur in getting your first job aren't deductible, because the tax law only allows you to write off expenses incurred in searching for another position in your present occupation.
But if you're on the lookout for a new position, start saving those job-search receipts.

What you can write off

• Same Occupation.  Your expenses must be for a job search in your current line of work. You can’t deduct expenses for a job search in a new occupation.
• Résumé Costs.  You can deduct the cost of preparing and mailing your résumé.
• Travel Expenses.  If you travel to look for a new job, you may be able to deduct the cost of the trip. To deduct the cost of the travel to and from the area, the trip must be mainly to look for a new job. You may still be able to deduct some costs if looking for a job is not the main purpose of the trip.
• Placement Agency. You can deduct some job placement agency fees you pay to look for a job.
• First Job.  You can’t deduct job search expenses if you’re looking for a job for the first time.
• Substantial Job Break.  You can’t deduct job search expenses if there was a long break between the end of your last job and the time you began looking for a new one.
• Reimbursed Costs.  Reimbursed expenses are not deductible.
• Schedule A.  You usually deduct your job search expenses on Schedule A, Itemized Deductions. You’ll claim them as a miscellaneous deduction. You can deduct the total miscellaneous deductions that are more than two percent of your adjusted gross income.
• Premium Tax Credit.  If you receive advance payments of the premium tax credit it is important that you report changes in circumstances, such as changes in your income or eligibility for other coverage, to your Health Insurance.
• Marketplace. Other changes that you should report include changes in your family size or address.  Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

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