10 Common Job-Search Tax Deductions

Job hunting is no easy task. It involves hustling for interviews, following up on leads, and maintaining a genial demeanor throughout countless encounters with potential employers. It’s essentially a job in itself.

However, your efforts may yield more than just a rewarding career. The IRS offers some substantial deductions for job search expenses, rewarding your hard work. If you opt to itemize deductions instead of taking the standard exemption, you can deduct the costs associated with your job search. These deductions fall under miscellaneous deductions and are subject to the 2 percent limit, meaning your combined miscellaneous deductions must exceed 2 percent of your adjusted gross income to qualify. But if you meet the criteria, it can pay off handsomely.

Before we delve further, let’s review a few key rules regarding these common job search deductions.

While the IRS offers substantial deductions for job search expenses, they come with stringent eligibility criteria. Let’s ensure that your job-search expenses meet these qualifications before proceeding.

Firstly, your job search must align with your current occupation. This means it cannot be your first job, and it must pertain to the profession in which you are currently employed. So, if you’re seeking deductions, now is not the time to switch from massage therapy to artisan plumbing. (Honestly, there may never be an ideal time for that.)

Additionally, there shouldn’t be a “substantial” gap in employment between your last job and the one you’re seeking. Although the IRS doesn’t provide a precise definition of “substantial,” it’s best to avoid lengthy breaks, such as taking an extended sabbatical in France, if you intend to claim these deductions.

Now that we’ve established your eligibility for job-search expense deductions, let’s explore what expenses you can claim. You’ll be pleased to learn that, despite being one of the less enjoyable tasks of job searching, your resume qualifies as a deductible expense. However, this doesn’t include the costs associated with gaining experience, such as the summer you spent working at a fast-food restaurant. Instead, typical expenses related to resume preparation, like printing and mailing, are eligible for deduction. Even if you hire someone to proofread it, you can still write off the expense.

Unfortunately, this doesn’t extend to paying someone to provide fake references to embellish your resume. However, if someone assists you in developing or preparing your resume, you can certainly include it as a deductible expense.

Navigating the job market can be challenging, especially during uncertain times. If you find yourself struggling to secure employment, you might consider enlisting the services of an employment or temp agency to assist you in finding suitable opportunities. However, these services often come with a price tag, leading to a dilemma: pay for assistance or go it alone?

Fortunately, the decision may become easier when you realize that any fees paid to these agencies are tax-deductible. This means that seeking professional assistance in your job search can potentially become more appealing. But the benefits of deductions don’t end there. Are you anxious about answering the dreaded “weaknesses” question in interviews? You can also deduct the expenses associated with interview preparation services, helping you hone your skills and impress potential employers with your responses.

Even with outside assistance in your job search, it’s unlikely that job offers will simply come pouring in. Therefore, it can still be beneficial to actively promote yourself and make your skills known to potential employers.

While extravagant measures like hiring an airplane to display your resume in the sky might not qualify for a tax deduction, you can still deduct the costs associated with advertising or marketing yourself for a new job. However, it’s important to remember that the IRS expects these expenses to be reasonable. So, while placing an ad in a local publication may be acceptable, extravagant measures like renting a giant billboard visible from the freeway might not pass muster.

Even in today’s digital era, many employers still rely on phone interviews as an initial step in the hiring process. The good news is that these phone calls are also eligible for a tax deduction, provided you keep track of the associated costs.

Any calls made during your job search or interview process can be included in your job-search deduction. Whether you’re reaching out to various employers or consulting with a job agency or headhunter, these phone expenses are deductible.

Additionally, once you receive a job offer, you can deduct the cost of hiring a lawyer to review the employment contract, even if the consultation takes place over the phone.

As mentioned earlier, there are numerous online activities that can contribute to your job search efforts. While you can’t claim the entire cost of a brand-new tablet purchased for browsing Craigslist ads, there is some good news regarding online-related expenses.

If you invested in any online software, such as JibberJobber, to enhance or streamline your job search process, you can deduct the expense. Similarly, other computer-related costs, such as using an Internet café for online job searches or applications, are likely deductible. However, it’s crucial to maintain detailed records and evidence to support your claims. The IRS will require documentation to verify your expenses, especially if you’re attempting to deduct items like pastries and beverages consumed during your job search activities.

So, you’re traversing multiple counties in pursuit of job opportunities. Whether you’re attending interviews, visiting potential employers, or networking with contacts for references, every mile you drive for your job search can be tax-deductible.

However, it’s essential to adhere strictly to your intended route when claiming mileage deductions. Any deviations for personal errands, like stopping for frozen yogurt, cannot be included in the mileage calculation. Otherwise, you can utilize the standard mileage rate provided by the IRS. As of 2014, this rate stood at 56 cents per mile—a favorable option for covering your travel expenses while navigating the job market.

Here’s an enticing idea: Why not schedule a job interview in Hawaii, even if you’re not entirely committed to the position? You could enjoy a week-long stay in Waikiki, soaking up the sun and sipping piña coladas. And the best part? It’s all tax-deductible!

However, the IRS isn’t easily fooled. While you can indeed deduct travel expenses for job searches, there’s a catch: the deduction applies strictly to the actual searching activities. If your trip involves an interview or related job-search duties, you may have a legitimate reason to claim transportation or lodging expenses. But be cautious—personal leisure time should be minimal compared to the time devoted to job-search activities to avoid raising eyebrows with the IRS.

Assuming you have a solid job offer in hand, it’s crucial to highlight a significant tax deduction available to those embarking on a new job opportunity: the deduction for moving expenses. Similar to job-search deductions, there are specific criteria to meet, but the potential benefits are substantial if you qualify.

Firstly, you must demonstrate that your new job location is significantly distant from your previous home. The IRS stipulates that the new job site must be at least 50 miles (80 kilometers) farther from your old residence than your previous job location was from your former home. Additionally, you must work at the new job for a minimum of 39 weeks during the year following your relocation.

If you fulfill these requirements, you can deduct virtually all expenses associated with the move, excluding food costs. Whether you drive or fly, require storage services, or need lodging during the journey, these expenses are eligible for deduction. Moreover, you can include the moving costs for every member of your household who relocates with you, including your beloved pets.

We’ve covered a plethora of typical deductions that could significantly benefit you during your job search. Yet, you might still have lingering questions, such as, “Can I deduct the cost of my recent hair highlights before that crucial job interview?” or, “Does the fancy Italian suit I wore while dropping off resumes qualify for a deduction?”

It’s essential not to push the boundaries. While opting for a slightly more vibrant resume paper might slide, the IRS isn’t likely to approve extravagant deductions like luxurious hair treatments or high-end attire. While you might associate certain expenses with the job search process—like the energy drinks you consume before a phone interview to boost your energy—these won’t be eligible deductions when tax season rolls around.