What Job and Job Search Expenses Are Tax Deductible?
A job search can generate a substantial amount of expense when you start adding up printing costs, travel costs, and expenses incurred from networking. According to the job loss and search regulations, you can deduct certain expenses incurred while looking for a new job, even if presently employed. You can deduct these expenses without being offered a new job.
You may qualify for the following job search related deductions:
You cannot deduct these expenses if:
- You are looking for a job in a new/different profession.
- There was a substantial break between the end of your last job and your search for a new one.
- You are in the job market for the first time.
- The expenses were reimbursed.
Learn more about job loss related tax effects.
Employment and Outplacement Agency Fees
You can deduct some job placement agency fees you pay to look for a new job in your current profession.
Employer Pays You Back
Should your employer repay you for employment agency fees at a later date, you must include any amount received in your gross income up to the amount of your tax benefit in the earlier year.
More information about recoveries.
Employer Pays the Employment Agency
If your new employer pays the job search expenses for your recruitment directly to the employment agency, you should not include them in your gross income.
Moving Expenses -- Moving for Your Job
If you recently moved to another city for a new job or because your old job is now at a new location, you might be qualified to deduct your job related moving expenses.
The key qualifiers for this deduction are how far you moved and the amount of time you spend on the job. Moves that are only short distances and jobs that are short-term or part-time generally do not qualify. However, if you can satisfy the distance and time tests then your job-related moving expenses might be tax deductible.
The distance test is met if your new workplace is at least 50 miles further from your former home than your previous workplace from that home. For example, if your old job was 10 miles from your former home, your new job must be at least 60 miles from that home.
To fulfill the time test, you must work full-time for at least 39 weeks during the 12 months immediately following your move. If you are self-employed, the time test requires you to work full-time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after your move. You can deduct your moving expenses on your tax return even though you have not met the time test by the date your return is due if you expect to meet the 39-week or the 78-week test as required.
Members of the armed forces do not have to meet these tests if the move was due to a permanent change of station.
Can I Deduct Other Expenses Related to a Job Move?
Realistic and practical moving job expenses are deductible and include the costs of moving your personal and household items to your new home. You can also deduct the expenses of traveling to your new home, including lodging costs.
However, you cannot deduct the following expeneses:
- The cost of meals eaten while travelling between your old and new homes
- The purchase price of your new home
- Expenses covered by reimbursements excluded from income
Additional information about moving expenses.
You may claim a deduction on expenses incurred for preparing and mailing copies of a resumé to prospective employers.
Job Search Travel and Transportation Expenses
If, while traveling to and from another area, you are searching for a new position in your current occupation, you may be able to deduct the cost of the trip. However, the trip must be primarily related to a new job search in order for the travel expenses to be deductable. If looking for a job is not the main objective of the trip, you may still be able to deduct some travel costs. The amount of time spent on personal activity compared to the amount of time spent searching for work will determine whether the trip is primarily a personal or a job searching trip.
Should the trip turn out to be non-deductible, you may be able to deduct the expenses directly related to searching for a new job in your present occupation while in the area. In order to calculate any car-related expenses, you may use the standard mileage rate.
More information about job search related mileage rates.
How Do I Claim Job Search Expenses?
You can claim them as a miscellaneous deduction. Miscellaneous deductions are reported on Schedule A, Itemized Deductions. You can deduct the total miscellaneous deductions that are more than two percent of your adjusted gross income.
What If I Receive a Premium Tax Credit Related to My Job Search?
Note: the information below will apply to 2014 and later tax returns.
If you received an advance payment of the premium tax credit in 2014 (which provides financial assistance to help you pay for health insurance you buy through the Health Insurance Marketplace), make sure that you report life changes your Health Insurance Marketplace. These changes include moving to a different state, as well as your income or family size. Reporting changes will help you get the proper amount and type of financial assistance so you can avoid getting too little or too much in advance.
More Information on Job Taxes and Deductions
What effects might a job loss have on your taxes?
Do you qualify for other tax deductions?