Ask the taxgirl: Job Search Expenses

Taxpayer asks:

Just before Christmas, I was laid off work. I have been looking for a new job since then but there are not many jobs out there. My brother told me that I can deduct the time I’m spending looking for a new job but that doesn’t make sense. Can you help?

Taxgirl says:

Sheesh, I am sorry to hear about your job. Unfortunately, it’s something that I’m hearing a lot of these days… Scary times.

On the plus side, your brother is kind of right: job hunting expenses are deductible. However, I think a bit of clarification is required.

You can’t deduct the time that you’ve spent looking for a new job. But you can deduct out of pocket expenses related to your job hunt. For example, you can deduct:

  • Paper, preparation expenses and printing for your resume.
  • Stamps to send out your resume.
  • Online expenses to post your resume (on monster.com, for example)
  • Fees paid to employment agencies
  • Travel to and from interviews.
  • Long distance calls to prospective employers.
  • Costs of getting a portfolio or other work samples together.

There are some caveats. You can’t deduct the cost of looking for your first job in a particular profession. Sorry new grads, you’re out of luck – it’s just the rule!

Similarly, you cannot deduct the cost of looking for a job in a new profession – if you’ve decided to pursue your dream job as a chef, that’s terrific, but if you were formerly a police officer, you can’t deduct the cost of begging Stephen Starr to throw you a bone.

You also can’t deduct job expenses if there has been a “substantial break” between leaving your last job and starting to look for new job. There isn’t a magic number of days that qualifies as a “substantial break” but use some common sense… Taking a few months to travel around the world in between jobs is likely a substantial break (lucky you!) just as taking a few years off to have children would qualify as a substantial break (though clearly not as much fun as traveling around the world, though it’s more work, more expensive and it feels longer). If you’ve found yourself watching every episode of A&E’s Intervention on TiVo or have managed to get through reruns of every cycle of America’s Next Top Model during daytime television, that may also qualify as a substantial break. It’s a little bit relative – but pretty much, you should be able to figure out what feels reasonable.

The expenses that do qualify are deductible as miscellaneous expenses, which you would claim if you itemize on a Schedule A. You can deduct the total of miscellaneous expenses that exceed 2% of your adjusted gross income (AGI). Hopefully, you won’t have many to deduct in 2009…

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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Comments

  1. Tee

    I quitted my job 2009 and I had to pay back my “sign on bonus” which earned and taxed in 2008. Can I take a deduction on this in my 2009 tax return?

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