It may seem like an odd time to bring this topic up, but if you’re in a job search NOW, you may not remember exactly what you paid for LATER.
That’s why I recommend you document your expenses as you go with a job search. Believe me, come tax season, you’ll thank yourself.
Now, exactly what can and can’t you deduct? There’s a good article that top-lines the process here. Here is an excerpt from the article calling out some of the ones you should be most aware of:
A new job on your current career path: Deductible. If you’re looking for a new position in your current line of work or field, you may be able to deduct search expenses — even if you don’t get or accept the job. But if you’re switching occupations, those costs aren’t deductible.
– A first job: Not deductible. Sorry, recent high-school and college graduates: The costs for finding that first job aren’t deductible. Nor can you write off expenses if you’re looking for work in a new occupation or if you’re starting back on the career path after an extended break, though the Internal Revenue Service in Publication 529 doesn’t define how long is too long.
– Resumé costs: Deductible. Expenses that you incur to prepare and mail a resumé are deductible. This tax break might be less valuable than it once was, since so many resumés now are sent via e-mail, reducing standard mailing expenses. Fees you pay for job-placement services generally are deductible, too.
– Travel costs: Deductible. Unreimbursed travel costs generally are deductible, even if you don’t get or accept the job. But to deduct costs, the trip must be undertaken mainly for the purpose of looking for a new position. That said, a portion of the costs still might be deductible, even if a job search wasn’t the primary objective. The amount of time you spend in another locale for personal reasons, as opposed to looking for work, is a key factor in determining how much and which expenses can be written off.
– Reimbursed costs: Not deductible. The above discussion assumes you pay for these various job-search costs on your own. If a prospective employer buys your airline tickets or pays for your hotel, you can’t also claim those costs. Double dipping isn’t allowed. Only unreimbursed expenses paid from your own pocket are deductible. A more-complete discussion of job-search costs can be found in IRS Publication 529.
– A word on deductions. Even if you qualify to write off job-search expenses, doing so might not be practical. You would need to itemize deductions, which roughly two-thirds of taxpayers don’t do — they take the standard deduction instead. Job-search expenses are categorized as a miscellaneous deduction, and you can deduct only those expenses to the extent they exceed 2 percent of your adjusted gross income. In other words, the IRS allows deductions, but only after you absorb several hundred or a few thousand dollars from your own pocket, depending on the circumstances.