If, like many Americans, you spent part of last year hunting for a new job, you may be able to deduct some of the expenses you incurred during your job search on your 2012 income tax return. However, it is important to note that you can only deduct job-search expenses if you looked for a job in the same field you worked in previously.
If you chose to change careers, expenses associated with finding a job in your new career won’t qualify for a tax deduction. For example, if you worked as a bookkeeper and looked for a new bookkeeping job, expenses incurred during your job hunt may qualify for a deduction. If, however, you decided to abandon your career in bookkeeping and search for a job as an office manager, your job-hunting expenses will not qualify for deduction, according to the IRS.
It is also important to note that job-hunting expenses cannot be deducted if you are looking for your first job or if there was a substantial gap between the end of your last job and the beginning of your job hunt. For example, if you got laid off and then went back to school for a semester or two to update your skills; your job-search expenses won’t qualify for deduction. Likewise, if you spend time caring for an aging parent before looking for work again or take a couple of months off to regroup or focus on personal matters before beginning your job hunt, your job-search expenses won’t qualify for deduction.
When filing your 2012 tax return, you should be aware of IRS rules about deducting job-hunting expenses.
- Employment and outplacement agency fees can be deducted, but you must include in gross income any reimbursements received.
- The cost of preparing and mailing resumes to prospective employers can be deducted.
- Travel expenses to look for a new job may be deductible if the primary purpose of your trip was job hunting.