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The silver lining of a job search? Tax deductions

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By Eve Nicholas
Herald Columnist
Even though it comes at the same time every year, the mid-April tax deadline still creeps up on many Americans. Really, there's no need to procrastinate. Unless you have a complicated pile of paperwork on your hands, you can avoid last-minute anxiety by completing this task right away.
Just don't move so quickly that you overlook important write-offs. Did you know that many job hunting expenses are tax deductible? This is good news for job seekers who shelled out money in 2011. And if you're still searching for employment, don't worry; you can still deduct your expenses whether or not you landed a position.
Before you calculate numbers and submit forms to Uncle Sam, check with your tax adviser and visit the IRS website ( to learn the details, rules and limitations. I am aware of a few opportunities to potentially minimize your tax bill, so I want to share them with you. But I am not a tax expert, so I urge you to research for yourself.
Here's a brief summary from the IRS site:
In order to write-off job searching costs, you must itemize deductions on Schedule A, and your total miscellaneous deductions (not just for job seeking) must exceed 2 percent of your adjusted gross income. You may not deduct your expenses if this was your first time looking for work, you were searching for employment outside of your current occupation or you took a "substantial break" between ending your last position and launching your job hunt.
If you cleared those hurdles, keep reading. The following expenditures may be tax deductible:
Resume writing and mailing: It can cost several hundred bucks to hire a professional to write your resume, cover letter and online profile. Plus, mailing and distribution expenses can really add up. Hold onto your receipts.
Employment and outplacement agencies: Most recruiters and agencies are paid by hiring companies, so these fees don't apply. But if you spent your own money on a career counselor or employment coach (to help you secure a position in your present line of work), your costs may be deductible.
Travel and transportation: If you plan a trip for the purpose of finding a new job, save records of all charges including travel to and from the destination, accommodations and mileage if you used your own car.
If you traveled to a location and happened to search for a job while you were there, the rules are different. Here is some content from IRS Publication 529: "The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job." Even if you spent most of your time sightseeing, you can still deduct some (but not all) travel and transportation expenses. Talk to your tax adviser to make sure that you comply.
Speaking of compliance, one warning: If your employer reimburses your expenses at any time, you must adjust your taxes appropriately. Also, if you were unemployed during the past year, remember that unemployment compensation, severance pay, bonuses and 401(k) distributions are generally taxable. Freelance or independent consulting income is taxable as well.
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Story tags » TaxesEmployersEmployment




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