This article was originally published in Hershey Advisors’ monthly Tax and Business Alert.
If you are looking for a new job, you may incur some expenses along the way that may be deductible. Here are some key tax facts you should know:
Same occupation. Your expenses must be for a job search in your current line of work, not for a new occupation. However, temporarily working in another field while you are job searching won’t cause your job search expenses to be nondeductible. Also, expenses to look for full-time work in your existing occupation while you’re working part-time or sporadically in the same line of work should be deductible.
Résumé costs. You can deduct the cost of preparing and mailing your résumé.
Travel expenses. If you drive in connection with your search, you can deduct the IRS business mileage allowance. If you travel to look for a new job, you may be able to deduct the cost of the travel to and from the area if the trip is made mainly to look for a new job. If the trip is not mainly to look for a new job, some of your expenses may still be deductible if they are directly related to your search, such as the cost of transportation to and from an interview.
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.
Reimbursed costs. You can’t deduct expenses that are reimbursed by a prospective employer or a future or past employer.
Itemized deductions. 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 2% of your adjusted gross income.