Job Hunting Tax Tips
 By Terry M. Blair

If you've been on the hunt for a new job during 2011, you may be able to deduct some of those job search expenses on your federal tax return.

To qualify for a deduction, the Internal Revenue Service says that the expenses must be spent on a job search in your current occupation. If you're trying to switch gears and have been searching for a job in a new line of work, then you can't deduct your job search costs.

As an AFS Member, you have access to online certified public accountants who can answer your questions about tax deductible job search expenses.

The CPAs at ProTax answer your tax questions at no additional charge. The service is included in the cost of your membership. ProTax gives you complete, confidential answers to questions within two business days.

To help you determine which of your job hunt expenses are tax deductible—and which ones aren't—follow these guidelines.

4 rules to remember

1. You can't deduct job search expenses if you're looking for a job for the first time.
2. You can't deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
3. The amount of job search expenses that you can deduct on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You calculate and report your deduction on Schedule A of your Form 1040.
4. Remember, these tax deductions only apply if you are searching for a job in your current occupation.

Agency fees
You can deduct the fees you pay an outplacement agency or an employment agency.

Résumé
You can deduct the costs of preparing and distributing your résumé to potential employers. These expenses might include:

• Writing and/or typing
• Printing
• Mailing

Travel and transportation
If you travel to look for a new job in your current occupation, you may be able to deduct your travel expenses.

For the expenses to be deductible, you must make the trip primarily to look for a new job.

The IRS states that the amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

If your trip is primarily to look for a new job, these types of travel expenses are usually deductible:

• Airfare
• Hotel
• Rental car
• Taxi

AFS can help you save on travel expenses with these resources:

• Car rentals from Budget, Enterprise and Hertz
• Hotel discounts with the Hotel Access Card and the Hotel Savings Program

Phone calls
You may be able to deduct long distance telephone calls to potential employers.

Get more information
If all of these tax rules and caveats have you confused, remember that as an AFS Member you have access to online CPAs at ProTax. They'll answer your tax questions confidentially and completely at no additional charge.

The IRS also offers more information about tax deductions for your job search.

Go to the website and see IRS Publication 529, Miscellaneous Deductions, to learn more about deducting expenses you incur during a job search.



(Posted September 2011)

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