Can I Deduct My Job Search Expenses?

If you lose your job and are actively searching for another one, you likely are not giving thought to your personal income taxes.

Here's a reason you should - You may be able to deduct the costs involved with searching for a new job.

The IRS allows an individual to deduct certain costs associated with job hunting, as long as you continue to search for a job within the same field of work that you were previously in.

If you decide to change careers or professions, of if you trade in your wage-earning job in order to open up a sole-proprietor business, those costs are not deductible. Certain business expenses are deductible on their own however. See the article Understanding Your Small Business Tax Write-Offs for more information.

According to the IRS, you cannot deduct expenses relating to a job search if any the following are true for your situation:

• You are looking for a job in a new occupation.
• There was a substantial break between the ending of your last job and the beginning of your search for a new job.
• You have never worked before and you are attempting to get your first job.

The IRS does not define what a substantial break is, but as an example, if you were to leave the workforce in order to pursue a family, and now years later you need to once again look for employment, this would be a substantial break.

If, when you lose your job or stop working for any reason, you begin a search for a new position in that same field within a relatively short amount of time, then this likely would not be considered a substantial break, even if it takes many months to locate a new job.

The following are deductible expenses: Employment and out-placement agency fees, such as those fees paid to a temp service as they try to match you with a similar job, amounts spent for professional resume preparation, postage costs to mail your resume and letters of inquiry, and reasonable expenses associated with traveling out of your area to look for a new job or to interview for a job.

If you travel in order to look for a new job, be cautious as to not include expenses spent on personal entertainment or personal expenses while you are out of town.

In order to deduct job expenses, you will need to itemize your deductions on a Schedule-A. This means that you will need to have a combination of itemized deductions that is more than your standard deduction in order to make it cost-effective for you to itemize.

For more information on itemized deductions, see the link to the articles below.

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What medical expenses can I deduct on my 1040 Schedule A?

How to deduct state and local taxes on a 1040 Schedule A

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