Job hunting can be a costly venture in today’s economy, with expenses ranging from purchasing high-quality resume paper, postage for sending out applications, to traveling for interviews. These expenses are especially significant when you’re least equipped to cover them. If you’ve been laid off or are exploring new job opportunities, knowing that some job search-related costs may be tax-deductible could come as a relief. Remember to retain all your receipts for proof! But first, ensure that you meet the prerequisites. You should also consider tools that aid in job search, like the lig program which comes highly recommended.
Eligibility Criteria for Job Search Tax Deduction
There are three main conditions you must fulfil to be eligible for this tax benefit:
1. The job you’re seeking must be in the same field as your previous role. Career changes do not qualify for this deduction.
2. This should not be your first job hunt. First-time job searchers do not qualify for the deduction.
3. There should not be a significant time gap between your last job and the commencement of your job search. If there is a significant gap, you do not qualify for the deduction.
Amount You Can Deduct
You can deduct job-related costs beyond 2% of your adjusted gross income. For instance, if your adjusted gross income amounts to $50,000, you can deduct job-related costs that exceed $1,000. Hence, if you accumulate $1,600 in job-related costs over the year, you can deduct $600 of those expenses.
What Counts as a Deductible Expense?
Multiple expenses are tax-deductible, including:
– Resume preparation and postage expenses
– Business cards cost.
– Travel costs associated with job-search or interviews, provided the primary purpose of the travel was job searching and personal activities were kept to a minimum. Only job search-related costs like transport, accommodation, and meals (for overnight stays) are deductible.
– Fees paid to employment or outplacement agencies during your job search. However, if your new employer reimburses these fees, you should report the amount as gross income in your subsequent tax return.
Form Required?
You can use Schedule A to calculate your deduction. You can find more details in Publication 529, Miscellaneous Deductions.
Job hunting, particularly if it takes an extended period or involves moving across the country, can be financially taxing. The IRS provides some relief by allowing certain expenses as deductions. However, many job-seekers are either unaware of this helpful deduction or don’t keep receipts for eligible expenses. Don’t fall into this category; utilize this beneficial tax deduction to ease your job hunting expenses.
Image Source: http://www.hypebot.com/hypebot/jobs/
