Let's talk about where on the tax return job hunting costs are reported. It's on Schedule A - Itemized Deductions. If you don't already itemize, it's very unlikely that you will be able to deduct the costs of job hunting. Additionally, before the costs can even begin to be deductible they, along with other miscellaneous expenses, must exceed 2% of your Adjusted Gross Income (AGI). Your AGI in the number at the bottom of page one of your Form 1040. So, if you and/or your spouse have wages, interest and dividend income, unemployment, etc. equal $50,000, your miscellaneous itemized deductions would not kick in until they exceeded $1,000.
Items that ARE considered deductible job hunting expenses:
- Travel and meals
- You can deduct mileage at standard rates (2009 is .55 cents) while job hunting for a new job in your present occupation. If you travel somewhere for your job search, you may deduct those costs as well. However, and that's a big however, only if the purpose is truly job hunting. One day of job hunting and 3 days of recreation will make the travel expenses non-deductible. Meals are only deductible at 50%. If the travel itself is not deducitble, expenses directly related to job hunting on the trip (such as cab fare to an interview) are deductible.
- Employment and outplacement agency fees
- You can deduct employment and outplacement agency fees you pay in looking for a new job in your present oocupation. If you get a new job, and an employer reimburses you these fees, they are not deductible. If you deduct the fees and are reimbursed in a subsequent year, you will need to add the amount you were reimbursed (up to what you deducted) to your gross income. You cannot deduct fees paid on your behalf by an employer.
Resume Preparation and Distribution- You may deduct the costs of having your resume prepared, printed, and mailed while looking for a job in your present occupation.
Items that ARE NOT considered deductible job hunting expenses:
- Personal Appearance
- The answer to the television ad mentioned earlier is no. No to dry cleaning, suits or any other clothing, manicures, hair cuts or any other personal item.
- Not Your Present Occupation
- You cannot deduct the costs looking for a job in a new occupation, you are looking for a job for the first time, or if there has been a substantial break in your employment. An example of this would be if you were a stay at home mom or dad, and have decided to re-enter the workforce.
- Anything not mentioned above!!!
A few other helpful hints:
- If you have child care expenses while job hunting, those expenses can be deducted as a Child Care Credit on Form 2441.
- Job relocation expenses are deductible, but the new job must be full time and at least 50 miles farther from your current home than your old job was. Types of expenses that qualify are the costs of packing and moving your belongings, and the cost of transporting you and your family to the new location. If you travel in your vehicle, you may deduct mileage at .24 cents/mile. You cannot deduct meals.
For more information, see Publication 521, Moving Expenses. - Normally commuting miles are not deductible. However, if you have more than one job, travel to your second, or even third job, on the same day is deductible at standard mileage rates. If you work the second job on a day off from the first, it is considered commuting and not deductible. See Publication 463, Travel, Entertainment, Gift and Car Expenses for more information.
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