Job Search Expenses May be Deductible

Taxpayers often change their job in the summer. If you look for a job in the same line of work, you may take a tax deduction for some of your job search costs. Here are some key tax facts you should know about looking for a new job:

Same Job.  Your expenses must be for looking for a job the same line of current work. You can’t deduct expenses for looking to secure a job in a new profession.

Cost of preparing and mailing Résumé.  You can deduct the expenses of getting you your résumé and mailing it to potential employees.

Travel Expenses.  If you travel to seek a new job, you may deduct the cost of your trip. To deduct the cost of the travel to and from the area, the trip must be mainly to look for a new job. You may still be able to deduct some costs if looking for a job is not the main purpose of the trip.

Job Placement Agency Costs. You can deduct some job placement agency fees you pay to secure a job.

First Job.  You can’t deduct job search expenses if you are looking for a position for the first time.

Substantial break between two Jobs.  You cannot deduct job search expenses if there was a long break between the end of your last job and the time you began looking for a new job.

Reimbursed Costs.  You cannot deduct any reimbursed expenses.

Itemized deduction, Schedule A.  You usually deduct your job search expenses on Schedule A, Itemized Deductions. You can deduct these as a miscellaneous deduction, subject to 2% limitation. In other words, if you spent $2,500 on your job seeking expense and your adjusted gross income is $100,000, you can deduct only $500, because the first $2,000 is not deductible.

Insurance Premium Tax Credit.  If you receive advance payments of the insurance premium tax credit, it is important that you report changes in your family and income circumstances, such as changes in your income or eligibility for other coverage, to your Health Insurance Marketplace. Other changes that you should report include changes in your family size and new address.

Advance payments of the insurance premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting either too much or too little in advance.