In these times of high unemployment one question that seems to come up quite often is whether or not job search expenses are deductible.  The answer is the same as it is for many tax questions which is sometimes.

Under what circumstances can I deduct job search expenses?

The first obstacle that must be overcome is that your expenses must be spent on a job search in your current occupation.  If you decide to switch careers job search expenses are not deductible.

What types of expenses can I deduct?

You can deduct employment and outplacement agency fees you pay as long as you’re looking for a job in your present occupation.  The IRS cautions that if your employer later reimburses you the reimbursement must be included in income up to the amount of the deduction you had previously reported.

You can deduct amounts spent for preparing and mailing copies of your resume to prospective employers.

You may deduct travel expenses.  While the IRS does allow travel expenses to be deducted when searching for a new job, be prepared to show that the primary purpose of your trip was to look for a new job. The IRS is always skeptical of travel expenses especially if there is also a personal component to the trip.  You may want to keep a log to document the amount of time spent on job searching if the trip was also tied in with some personal activities.

You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin to look for a new one.  In addition, you cannot deduct job search expenses if you are looking for a job for the first time.

Once again keep in mind that to deduct any job expenses the job must be in your current occupation.  I know I keep repeating this but this is one of the most common mistakes made when deducting job search expenses.

Lastly job search expenses are deducted as itemized deductions on your income tax return and must be in excess of 2% of your Adjusted Gross Income (AGI).

Conclusion

Unfortunately, as stated many times over the past few years, the current economic conditions have raised many questions.  The deduction of job search expenses can be a tricky area and this article gives only a quick synopsis of how the deduction works.  I, as always, advise you to meet with a tax professional if you believe you may have qualified job search expenses.