The Friendly Accountant: Deducting Job-Hunting Expenses

Nate-Reagan(1)We are pleased to debut a new semi-regular column, written by Handy Reagan LLC Director of Tax Services Nate Reagan.  Nate holds his CPA/PFS credentials, and his specialty is multiple related business entities and wealth management planning. In “The Friendly Accountant” column, Nate will share with us information that is relevant to ELGL members.  Today, he explains how your job-hunting expenses may be tax deductible:

Deducting Job-Hunting Expenses

If you’re looking for a new job, then you may be able to claim a tax deduction for some of your job hunting expenses–as long as it’s in your same line of work (sorry you can’t go chasing that dream of becoming an NFL head coach and expect to deduct these expenses).

Here is What You Need to Know:

  1. Expenses may be deductible even if your job search is unsuccessful.
  2. You can’t deduct job search expenses if you’re looking for a job for the first time.
  3. You can’t deduct job search expenses if there was a substantial break between the end of your last job and the time you began looking for a new one. Although you don’t have to be out of work for the expenses to qualify.

Deductible Job-Hunting Expenses:

  1. Fees paid to recruiters and employment agencies.
  2. Fees paid for career counseling.
  3. Costs of assembling and mailing a resume & portfolio of work.
  4. Advertisements for a new job.
  5. Transportation costs to a job interview.
  6. Out-of-town travel expenses (including lodging) if the trip is primarily to look for a new job. (Traveling to North Carolina for an interview can be costly).
  7. 50% of meals and entertainment expenses directly related to job search or interview.

What’s the Catch?

Job expenses only reduce your taxes if they exceed 2% of your adjusted gross income. However this measure may be exceeded more easily than you realize if you are out of work or only worked part-time during the year.

Yes, these expenses may seem minimal, but depending on your search, they may add up quickly. Everyone’s situation is different. In today’s competitive environment people go to extreme measures to secure a job. Don’t forget to take advantage of the tax benefits the government is providing you.  Most people don’t realize the costs they put into a search until they start consciously keeping records. Give us a call if you have any questions about tax deductions related to a job search.

Remember once you get a new job you may be able to deduct moving expenses.  But that’s another story for another time.