The economy recently saw some good news on the job front: A recent jobs report paints a far sunnier picture than we’ve seen in years and led to a stock market rally. Still, the Christian Science Monitor is reporting that as many as 15 percent of Americans are still looking for work.
Even many people who currently have jobs spent some time during 2011 looking for one. If you spent 2011 looking for a job, there’s a good chance you qualify for a number of tax deductions for job seekers.
IRS Pub 529 Guidelines
The Internal Revenue Service provides some basic guidelines when it comes to tax deductions for job seekers. You should look at these guidelines before you attempt to claim any deductions related to a job search:
- Tax deductions only apply to looking for a new job in your current profession. You cannot use the tax deductions to look for a job in a different profession. Further, first-time job seekers cannot use any of the deductions.
- If you get a job through a placement agency, you may deduct the associated fees. However, if you are reimbursed by your employer for the cost of a placement agency, you must report this as regular income.
- The IRS does not allow deductions after a “substantial break” between your last job and your current job. The IRS does not say specifically what constitutes a “substantial break,” however.
- Only amounts over 2 percent of you adjusted gross income are deductible.
Job Search Tax Deduction Options
There are a number of things you can begin adding up to reach the required 2 percent of your adjusted gross income. Income tax deductions are allowed for the following on your itemized deductions worksheet:
- Resume and Application Costs: Whether it’s printing out your resume, sending it through the mail or buying special paper to print the resume on, all of these costs are deductible.
- Travel: You can deduct a number of costs associated with travel. However, the travel must be directly related to looking for a job. This includes the mileage you put on your car during your job search as well as taking a flight and booking a hotel to look for work in another city.
- Babysitting: Do you need someone to look after your kids while you’re out job hunting? Guess what? Your babysitting fees qualify as deductions, provided that you are legitimately hiring a babysitter to look after the little ones while you look for your next job.
- Moving: If your job search lands you a gig on the other side of the country, you’re in luck: You can deduct all costs associated with your move, from packing tape to shipping. There are some stipulations, including that you must move more than 50 miles from where you currently live to qualify.
- Training and Networking: Looking for a new job can often include job training and heading off to seminars to keep your skills fresh as well as your foot in the networking pond. The cost of such events is deductible, provided that it is legitimately related to your job search.
- Phone Calls: You can deduct the cost of phone calls made from a land line or a mobile account used only for your job search. You cannot deduct the cost of phone calls made from most mobile accounts, as you buy your minutes in bulk.
Income Tax Deduction
When filing your 2011 taxes (or any other year) you should take all legally available deductions. Don’t try and play “audit roulette,” but don’t be afraid to to take every deduction you’re allowed–otherwise you’re just sending gifts to the IRS.