Tax Deductions for Job Seekers

tax deductionIn today’s economic uncertainty, it is always good to know where we can save money and make the money we already have go farther.  Job seekers can deduct almost every legitimate expense they incur while looking for employment.  Just educate yourself on the IRS regulations.  Most job seekers do not have a lot of knowledge regarding tax deductions.

According to IRS publication 529, job seekers can deduct certain job-searching expenses even if they remain unemployed. But with most tax code rules, there are some caveats. You cannot deduct expenses if you are looking for job in a new occupation. For example, if you are a teacher trying to seek employment as a lawyer, this would not be an allowable deduction. First time job seekers are not allowed to take any deductions and self-employed people may not benefit from these deductions because they have to exceed 2% of your adjusted gross income.

Allowable deductions are costs that are incurred from using a headhunter or employment agency.  However, if a new employer covers those expenses you will have to count it as income when you file taxes. The IRS considers this to be double dipping.

Even in this digital age many job seekers mail out their resumes, which can be a costly affair between paper, stamps and printer expenses. The IRS allows you to deduct all the money spent on preparing and mailing your resume, even if you are sending out a 100 resumes a week. The rule is, however, your search must be for a job in your old occupation to remain eligible for the deduction.

The IRS lets you deduct travel expenses if you have an out-of-town event or interview as long as the primary purpose of the trip is to seek employment.  Even the car mileage you accumulate driving to and from interviews is deductible. The 2012 rate for business use of a vehicle was around 55 cents per mile.

According to the IRS, the amount of time you spend on personal activity compared to the amount you spend looking for an employment will determine if you can take the deductions. It is imperative to keep accurate records and manage all receipts. Experts say job-related write offs tend not to raise a red flag within the IRS, but they still recommend keeping all your receipts, networking event information, proof of travel and anything else that can validate a claim in the event of an audit.

Source: “Tax Breaks Every Job Seeker Needs to Know About.” Fox Business. Web. 26 Feb. 2013.

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