Job Search Expenses May Lower Your Taxes

September is often a time of transition, when people decide to make major life decisions–such as changing jobs. 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.

Here’s what you need to know about deducting these costs:

1. Same Occupation. Your expenses must be for a job search in your current occupation. You may not deduct expenses related to a search for a job in a new occupation.

2. Reimbursed Costs. If your employer or another party reimburses you for an expense, you may not deduct it.

3. Placement Agency. You can deduct employment and job placement agency fees you pay while looking for a job.

4. Resume Costs. You can deduct the cost of preparing and mailing copies of your resume to prospective employers.

5. Travel Expenses. If you travel to look for a new job, you may be able to deduct your travel expenses. However, you can only deduct them if the trip is primarily to look for a new job.

6. Work-Search Break. 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.

7. First Job. You can’t deduct job search expenses if you’re looking for a job for the first time.

8. Schedule A. 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 two percent of your adjusted gross income.

9. Premium Tax Credit. If you receive advance payment of the premium tax credit in 2014 it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

Give us a call if you have any questions about tax deductions related to a job search.