Blog Posts

What Job Search Expenses are Deductible?

By 2nd December 2019

job search taxes

According to the Bureau of Labor Statistics, there were 12 million of jobless Americans as for February 2013. Many of them didn’t start looking for the job due to the high expenses that go with a job search.

Resume and cover letter writers, placement services, travel, phone calls, and many other job search related expenses hit the pocket.

Job search equates with a full-time job, though none of the job seekers receive money for it. Still, every job seeker can get his money back because some of the job search expenses are deductible.

International Revenue Service does help job seekers to deduct a portion of their job search expenses on their taxes. Of course, this rule doesn’t relate to every sort of expenses.

Still, it often covers a group of so-called qualified job search deductible cost such as resume services or traveling for an interview.

Keep reading to understand what to expect from IRS and how to apply for a tax deduction.

Common Rules of Tax Deduction

If you expect to deduct some of your job search expenses, you should follow certain rules. IRS revealed them on its official website.

Job seekers can’t apply for a tax deduction if they change their career. If you graduated from university and worked as a manager and now you ended school or professional courses and want to become a designer, then none of your job search expenses are deductible. Surely this doesn’t mean that you should ignore professional design resume tips.

Job seekers that just graduated from college and started their first job search also can’t expect to receive some of their money back from the IRS.

If a job seeker decides to leave a job to travel, start a family, build children, or simply enjoy a jobless life and then expects to start a job search and deduct some of the job search expenses back, IRS is about to disappoint them.

Job search expenses aren’t deductible after substantial employment gap. The service doesn’t explain what “substantial” means. If the job seeker doesn’t start looking for a job in the shortest period, then the employment gap is considered to be substantial.

Even if a full-time job isn’t your main life goal for now but you would agree for a job in a perspective, you should continue sending job applications to have a chance to deduct your expenses later. The best you can do is to list your salary requirements accurately and find the best job opportunity out there.

What Expenses Are Deductible?

If you meet all the aforementioned criteria, you should figure out what job search expenses are deductible in the first place.

  • Resume Writing Services – if you pay a service to polish your resume, you can deduct these expenses later. In fact, all resume related expenses and mailing costs are deductible.
  • Travel Expenses – if you need to travel around your community. State or country to visit job interview, then you can apply for a deduction. Still, be careful. IRS doesn’t pay back all expenses blindly. If your trip includes shopping, clubs, theme park, parties, and so on then you shouldn’t even try to deduct expenses.
  • Employment Agencies – there is no difference for IRS whether you use a help of employment agency or just job search website that charges a membership fee – both of these expenses are deductible.

Also, all smart job seekers should be aware of new Facebook “Work History” feature to improve their chances of landing a job!

Keep in mind that everything out of the list above isn’t deductible. Any entertainment during interview trip or your new suit for the interview refer to your personal expenses and no one will finance them except you.

Tricky Detail to Consider

job search expenses

Some of the job seekers don’t even try to deduct their job search expenses and, at some point, they are right. IRS launched 2% rule. According to this rule, only those expenses that exceed 2% of the adjusted gross income can be deductible.

You should understand that deduction is when the person receives only a small portion of the expenses that are equal to their tax bracket.

Let’s say your annual income made up $35,000 and you spent $800 on the job search. $700 of the whole sum isn’t deductible according to the 2% rule. You could get $100 but according to 15% tax bracket, you can only expect for $15.

Of course, $15 is better than nothing. Writing all expenses down and filling the application to receive a portion of the job search expenses back isn’t that complicated or time-consuming. Even if you are aiming for one of the most well-paid jobs, you shouldn’t look down on this opportunity.

Some of the job seekers decide to take their chances while others decide to dive into the new work. The choice is up to you, just learn all the peculiarities of job search expenses deduction beforehand!