Job search tax deductions are something that can help take the sting out of the tough times you may be facing just a bit. While it isn’t as good as being employed, at least you know that you can get certain tax breaks for your efforts. Even if you were lucky enough to get a job in the later part of the year, you may still be able to deduct some of the expenses you incurred as a result of looking for that job.
Before you go and start deducting everything that you paid for as a result of your job search, you need to realize that there are certain rules that come with job search tax deductions. Here are some important rules regarding deductions:
1. Same Field: Your job search expenses can only be deducted if you are searching for a job within the same field or industry that you were previously employed in. So, if you have decided to switch gears and try your luck in another field of work, you will be out of luck come e-file tax time.
2. Time: You can only wait so long before you begin your job search after you lose your job and still be able to take job search tax deductions. If you wait too long, you could be out of luck. In this case, haste certainly makes waste.
3. No First Timers: If you are searching for your very first job, you can’t deduct the expenses. These deductions are meant to help with those who have been affected most by the recession and Uncle Sam doesn’t deem first timers as such.
4. Must Itemize: There are a number of job search deductions you can take, but only if you itemize. With the exception of moving, all of your job search deductions will go under the section on your tax return that is for miscellaneous deductions.
If you meet the criteria for job search tax deductions then you will need to know what you can deduct when tax time rolls around. Here is a list of some of the various job search tax deductions that you will be able to claim if you qualify:
• Resume Related Fees: Your resume is the most important tool to have with you when you are searching for a new job and Uncle Sam recognizes this by allowing you to deduct all resume related expenses. If you do anything resume associated, it is generally tax deductable, for example, you can deduct expenses for paper, ink, printing costs, mailing costs, and faxing costs. Basically, anything that has to do with you creating, sending out, or revising your resume will likely be tax deductable. Even if you hired a resume writer to create or recreate your resume for you, it is likely going to be deductible.
• Phone Interviews: A growing trend in business these days is potential employers conducting interviews over the phone. If you were involved in such phone interviews and the calls were long distance, then you should be able to deduct the time you spent on the phone with the potential employer. This is always made easier to deduct if you keep records of the time you spend on such calls. This will give you a reference pint to work with when it comes time to make the tax deduction.
• Travel Fees: If you had to travel in order to go after potential work, that too is tax deductible. This goes beyond just running around town looking for a job as many people have to go across the globe in search of a job these days. As long as a trip is more work than pleasure, then the majority of the expenses should be okay to deduct. This is of course assuming that the potential employer doesn’t pick up the tab for you going to see them for an interview.
• Agency Fees: There are many agencies that, for a fee, will help you line up interviews and help you get your name out there with resume distribution and the like. While you may have limited resources to finding a job, these agencies can use their vast connections in order to help you find a job at a much faster pace, which is why they will charge you for their services. However, whatever those charges are, as long as they went to help you find a job, they too will be tax deductible. Be warned though. If you do get a job, then take the tax deductions and end up having your new employer reimburse you for the fees the agency charged you, you will have to then claim that on your next year’s taxes as income.
• Moving Costs: This is a deduction that you can take whether you itemize or not. If your new job forces you to relocate, then you can deduct a great deal of your moving expenses as a result. You can deduct moving your personal items as well as any lodging that is incurred along the move.
To be safe, you should always consult with your tax professional before you actually take a job search tax deduction. A tax professional will be able to tell you with great certainty what is and isn’t allowed to be taken as a deduction by you and will even be able to guide you and help you find some other possible deductions that you may have missed yourself, which will help you save even more money.
Searching for a new job can sometimes be a challenge. When you add tough economic times to the mix it can seem as though it is near impossible. At least Uncle Sam allows for you to get a few breaks when it comes to paying him provided you are out there trying to get a job. While the effort may be great, at least there is some type of reward that can keep you going until you do finally nail down another great paying job for yourself.