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Expenses From Looking For Work May Be Tax-Deductible

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On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Expenses From Looking For Work May Be Tax-Deductible
Article Highlights:
  • Schedule A 
  • Travel Expenses 
  • Résumé Preparation 
  • Job-Placement Services 
  • Unemployment Income 
  • Health Insurance 
If you are looking for work, some of the expenses you incur may be tax-deductible, provided that you are looking for work within the same field. Unfortunately, expenses incurred when searching for a job in a new field or a first job are not tax-deductible.

If you are an employee, job-search expenses are deducted as miscellaneous itemized deductions on Schedule A. Thus, you have to itemize your deductions to gain any benefit. On top of this, miscellaneous itemized deductions are only deductible to the extent that they exceed 2% of your adjusted gross income. Self-employed individuals can deduct expenses related to acquiring new business on Schedule C.

Travel Expenses – One of biggest expenses related to searching for a job is travel, which may be local or away from home. Deductions for travel expenses when driving locally for job interviews are generally limited to the cost of parking and tolls, plus mileage, which is deducted at the current mileage rate (53.5 cents per mile in 2017) for trips to and from potential job locations and job-placement services.

If you travel outside your tax home (where you normally live and work) overnight, you may be qualified to deduct, in addition to the auto travel expenses described above, the full cost of overnight lodging and of various forms of transportation (air, bus, train and more), as well as half the cost of meals.

Résumé Preparation – The costs of having a professional service prepare your résumé are deductible. In addition, you can deduct the costs of résumé reproduction, postageand envelopes for mailing.

Job-Placement Services – You can generally deduct the fees paid to job-placement agencies when looking for a job.

A few additional tax issues might apply to your situation:

Unemployment Income – Although some states don’t tax unemployment compensation, that income is taxable income for federal purposes. Generally, no income tax is withheld on unemployment benefits, which may lead to an unpleasant surprise at tax time.

Health Insurance – If you acquired your insurance through a marketplace, and if your premiums are subsidized with the advance premium tax credit, it is important that you report any changes in circumstances to the marketplace; this includes increases or decreases in income, changes in eligibility for other coverage and changes of address. Advance payments are paid directly to your insurance company to lower the out-of-pocket cost for your health insurance premiums. Reporting changes will help you get the proper type and amount of financial assistance so that you can avoid getting too much or too little in advance.

If you have questions about job-search expenses or other issues related to changing employment, such as pension-plan rollovers and moving-expense deductions, please give this office a call.







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