Job Hunting Expenses Deductible?

In case you have been sleeping the last couple of years, times are tough. Unemployment is in the 10% range (depending on where you live) and under-employed rates are estimated closer to 16 or 17%. Face it - a lot of people are looking for work.

In certain cases your expenses you incur hunting for that new job just might be deductible to lower your income taxes. Of course there are a few rules....

• Same occupation - you must be looking for a job in the same occupation that you were working in. If you are looking for a change in the work you do, then no deductions. That makes it pretty difficult for those coming from an occupation with excess capacity (e.g., home building). By the way, the same rule applies to educational costs - if the education is to permit you to work in a different occupation (with very narrow definitions for education) then the expense is not deductible.t
• Not your first job - expenses you incur to obtain your first job are not deductible. If you think about it, this is a repeat of the previous bullet. After all, your previous occupation was probably a student - high school, college, whatever. Or maybe homemaker - same thing.
• Travel expenses - these might work, but you must be careful on this one. Spending half a day looking for a job during a week stay in Hawaii won't cut it. To deduct these expenses your personal time on the trip (i.e., time not looking for a job) should be minimal.
• Minimum break in the action - if you take very much time off you will disqualify the deduction. That does not mean you must find that replacement job soon, but you must start looking pretty soon.

So what kind of things are deductible? It includes items such as resumes, referrals, job counseling including interview training, fees to employment or placement agencies, and as indicated above sometimes travel expenses.

These expenses are potentially deductions from income, not tax credits. This means you must be itemizing your taxes to take advantage of it.

While this sounds great, remember that all such issues in taxes are always subject to the facts and circumstances in each case. You would be best to discuss this with a tax professional, and I'd suggest an Enrolled Agent (and that name will likely change later this year). But when you discuss this with your tax preparer, remember when they discourage the deduction it is not because they are trying to maximize your taxes. Their job is to help you avoid being on the wrong end of an examination by the IRS or state authority. Lay out the facts, and take their advice.