During the hectic holiday season, many of us stay busy by arranging holiday travel, attending parties and buying last-minute gifts. Our minds race in anticipation of seeing old friends and family members, and taking leisurely vacations from work and school.
At the same time, we feel anxious about other end-of-the-year deeds, such as finding lost receipts and tracking expenses as another tax year comes to a close.
Yes, the new year is approaching, and it’s time to determine which of your 2007 job hunt expenses are tax deductible.
If you didn’t realize that the IRS allows job search expenses as deductions on your income tax, this probably comes as very good news. Just make sure that you follow the IRS guidelines carefully, as always. Talk with your tax accountant or adviser, and go to the official IRS Web site at www.irs.gov to learn about the details and limitations about this important deduction.
According to the IRS site, if you plan to claim your costs in seeking work, all of your miscellaneous deductions must exceed 2 percent of your adjusted gross income, and you have to itemize these expenses on Schedule A of your tax return.
Also, if any of the following statements apply to you, the IRS will not allow you to take this deduction:
You are pursuing a job in a new occupation.
You took a “substantial break” between ending your last job and starting your job search.
You are job hunting for the first time.
If you still qualify, it’s time to think about your out-of-pocket expenses. The IRS Web site lists the following expenditures as tax deductible:
Employment agency fees. Some employment and outplacement companies charge for their services. If you contracted with an agency during 2007, and the above restrictions do not apply to you, hold on to your receipts.
Resume writing and mailing costs. Hiring a professional writer to prepare your resume and cover letter might enhance your documents and strengthen your presentation. Plus, you can claim these expenses. You may also deduct the costs of mailing or distributing your resume to potential employers. As long as the above limitations apply, that is.
Travel and transportation expenses. Expenses add up quickly when you travel. Luckily, if you plan a trip for the purposes of finding a new job, your costs may be tax deductible. Document your travel and transportation fees very carefully, including the cost of transportation, accommodations and mileage (if you used your own car). Be sure to speak with your tax adviser about this one, especially if you combined job searching with vacation time.
Keep this in mind: If your new (or old) employer refunds your money at any time, even if it takes several years before you receive the reimbursement, you must adjust your taxes appropriately.
Remember, there is no right way to land a new job. Many professionals conduct fast, effective career searches without incurring a single expense. They use the Internet, the phone and face-to-face contact and achieve great success.
If you are one of the countless individuals who spent money on your job search, it’s in your best interest to contact your accountant or tax adviser, and read the IRS site to find out how you can lower your tax bill.
Send your job search questions to Eve.GetAJob@gmail.com.
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