Tax Benefits for Job Seekers

In the current economy, many taxpayers are spending time updating their résumés and attending job fairs. If you are searching for a job, there is a good chance you can deduct some of your job-search expenses on your 2010 tax return. 

Here are some important points that might be helpful about deducting costs related to your job search:

• To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses incurred while looking for a job in a new occupation.  You also cannot deduct job search expenses if you are looking for a job for the first time. 
• Employment and outplacement agency fees you pay while looking for a job in your present occupation can also be a deduction. If your employer pays you back in a later year for employment agency fees, you will need to include the amount you receive in your gross income up to the amount of your tax deduction in the earlier year. But, if your employer pays the fees directly to an employment agency and you are not responsible for them, you do not include them in your gross income.
• You also should deduct amounts you spend for preparing, printing and mailing your résumé to prospective employers as long as you are looking for a new job in your present occupation. 
• You may be able to deduct travel expense if you travel to look for a new job in your present occupation. You can only deduct the travel expenses if the trip is primarily to look for a new job. Even if you cannot deduct the travel expenses to and from an area, you can deduct the costs of looking for a new job in your present occupation while you are in that area.
• The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is personal or is primarily to look for a new job.
• However, if there was a substantial break between the end of your last job and the time you begin looking for a new one, you cannot deduct job search expenses.

For more information about deducting job search expenses, contact your local Pro Tax office – also, see IRS Publication 529, Miscellaneous Deductions.

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