While I realize that April 15th is coming up fast, and not everyone procrastinates as much as I do in terms of paying their taxes, I still thought it might be helpful to mention a few potential deductions and write-offs that active job hunters are usually able to take, related to their search for employment. For safety’s sake, however, let me first stress that the tips I’m passing along aren’t “official” ones and that you should check with your own accountant, or the IRS, if you have specific questions or need to get an exact ruling around what expenses you may (or may not) be able to deduct!
On that note, before proceeding, you’ll find a handy IRS document here that answers a lot of specific questions related to tax issues and unemployment. It’s a pretty good reference, providing a lot of good basic information such as:
• Severance pay and money received for accrued vacation or sick days is taxable, as are unemployment benefits, but for 2009 you can deduct up to $2,400 in these received benefits under the American Recovery and Reinvestment Act.
• IRS rules stipulate that individuals can typically deduct job hunting expenses only if they collectively exceed 2% of their adjusted gross income. You have to itemize these expenses as a “Miscellaneous Itemized Deduction” on your tax return and they apparently apply only if you’re looking for a new job in your existing occupation. I’m not sure why the IRS draws this distinction, or how stringently they enforce it, but you’ll find this requirement stated in all of their materials.
So moving on, in terms of some of the job search deductions one can often take, they include:
• Employee agency, career counseling, and outplacement agency fees
• Resume-writing, printing, and mailing/distribution costs
• Business card or calling card printing fees
• Newspapers and trade publications you purchase to read want ads (seems archaic, but it’s allowed!)
• Travel expenses (if they can be tied directly to your job hunting activities, versus recreational pursuits)
• Long-distance charges (again, if tied directly to job searching)
• Auto mileage driving to and from legitimate job hunting activities (the IRS allows a 55 cent-per-mile deduction for 2009)
• Education and professional development classes (research this one carefully, and review the American Opportunity Credit and Lifetime Learning Credit guidelines to see if those might apply to you, as well)
As for those items job hunters usually AREN’T able to deduct?
• Haircuts, makeovers & beauty treatments
• Gym & club memberships
• New clothes (no matter how old your suit might be!)
• Internet access charges
• Cell phone & mobile device subscription fees
Again, there’s plenty of additional information on the web for those who need to research these areas further, but I thought this high-level summary might help a few of you out there identify some deductions you’d previously overlooked. Every little bit helps, right?