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Are my job-hunting expenses tax deductible?

Job-hunting expenses can be deductible if you meet certain requirements

First you must be looking for a new job in your present line of work.  Expenses for this type of search are deductible even if a new job is not found. Expenses incurred looking for a job in a new trade or business are not deductible, even if a job is found.  Thus job-hunting expenses for most new college graduates are not deductible as one's first "real" job is considered by the IRS to be in a new trade or business.

Second you must itemize your deductions as job-hunting expenses fall under the category "miscellaneous itemized deductions subject to the 2% floor."  This means that the deductions you wish to claim must exceed 2% of your adjusted gross income (the bottom line number on page 1 of Form 1040) before you will receive any tax benefit for them.

Examples of deductible job-hunting expenses include:

  • transportation costs to job interviews (cab fare or parking and mileage at 55 cents per mile)
  • fees for legal or tax advice relating to employment contracts.
  • 50% of meals and entertainments expenses directly related to job searches
  • fees paid to employment agencies or job search websites
  • postage on correspondence related to the job search
  • newspapers and professional subscriptions bought for employment advertisements
  • career counseling services
  • out-of-town travel expenses including meanls, lodging and local transportation, if the trip is primarily to look for a new job. If the primary purpose of the trip is personal, travel costs are not deductible. However, out-of-pocket job-hunting expenses at the dsitination are still deductible.

Examples of non-deductible job-hunting expenses include:

  • professional clothing to wear to interviews
  • haircuts and manicures

As with any tax deduction, be sure to keep receipts to support the job-hunting expenses deducted on your tax returns.  Better yet, make notes on the receipts to indicate the potential employer or position that expense relates to.

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