Your job search is tax deductible

As if the mental wear and tear of looking for a job weren't enough, it also strains your wallet. The good news is that much of your job search expenses are tax deductible.

According to H&R Block:

You can claim job-seeking expenses as long as the amount of all miscellaneous itemized deductions is more than two percent of your adjusted gross income. Job seeking deductions are also subject to the overall limitation on itemized deductions based on AGI threshold amounts. To figure your deduction, on Schedule A, subtract two percent of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 36.

Here are some of the expenses that are tax-deductible:

Employment agency fees:
  • If your new employer repays your agency fees, you must include the amount in your gross income up to the amount of the deduction you claimed earlier.
  • If your employer pays fees directly to the agency and you have no responsibility for them, you do not have to include them in your gross income.
Career counseling to assist you in improving your position Executive recruiter fees Newspapers you purchase to read employment ads Resume preparation:
  • Typing and printing
  • Postage
  • Toll telephone calls
  • Advertising
  • Photographs (if required for your resume in your trade or business)
Travel for job search*:
  • Airfare or mileage
  • Lodging
  • Meals (50 percent of the cost)
Legal fees protecting employment status

*These are deductible only if looking for a job is the primary purpose of the trip. It is important to keep a daily log of activities and expenses for substantiating the trip.

Some more useful job search tips

H&R Block also stresses that, to qualify for a deduction, your job search must be for a job in your current, or most recent, trade or business and should be at a similar level of responsibility with duties similar to those of your most recent job.

  • If you have not held a job in that trade or business for an extended length of time your job search will be considered for a new trade or business and your deductions may not be allowed.
  • If you held a college internship or valid job while in college and your search is for a job in the same trade or business, you will be able to take the job search deductions.
  • If you are just out of school and had no similar paying jobs in school, you are looking for a job in a new trade or business and your deductions will not be allowed.