JOB HUNTING? DON'T OVERLOOK TAX DEDUCTIONS

With some parts of the economy starting to pick up, more people are in the market for a new job.

Here are eight tax tips about the costs you might incur while job hunting - and the ins and outs of related tax deductions:

  1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
  2. You can deduct employment and placement agency fees you pay while looking for a job. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
  3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers.
  4. If you travel to look for a new job, you may be able to deduct round-trip travel expenses. You can deduct the travel expenses only if the trip is primarily to look for a new job. 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 primarily for personal reasons or primarily for a new job.
  5. You cannot deduct job search expenses if there has been a substantial break between the end of your last job and the time you began looking for a new one.
  6. You cannot deduct job search expenses if you are looking for a job for the first time.
  7. The amount of job search expenses that you can claim on your tax return is limited. You must itemize your deductions, and you can claim only the amount that exceeds 2 percent of your adjusted gross income when combined with your other miscellaneous itemized deductions.
  8. If you have been unemployed or underemployed during the recent economic downturn, check with your tax adviser to learn how these rules may affect your ability to deduct job-hunting expenses.
 
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