What can job seekers deduct on their taxes?

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Rarely does anyone greet tax season with a big smile, an excited march to the file cabinet and a celebratory beer. More often the arrival of your W-2 statement in the mail causes a sigh, a frantic search for important documents in your desk (and on the floor and in the trash) and a therapeutic six-pack of beer just to get you through it all.

Now, we can’t erase the pain of filing your taxes; that’s between you and Uncle Sam. However, we might be able to get you a little more cash at the end of the year, or maybe cause you to pay less. See, many job seekers don’t realize that they can claim some of the expenses from their job seeking efforts on their taxes. And even for those who do know, they don’t always understand what is and isn’t a valid claim.

According to the Tax Breaks for the Unemployed Survey 2011 conducted by Complete Tax, not everyone is clear on the rules for expensing job search efforts. The survey asked readers to declare the following statements true or false. Before looking at the answers in the chart below, see if you can answer the correctly.

  • Haircuts or clothes necessary for job interviewing can be deducted
  • Travel for job interviews can be deducted
  • Printing and mailing résumés can be deducted
  • A home office used to help in a job search can be deducted
  • Outplacement firm fees can be deducted
  • Classes to learn new skills outside the person’s trade can be deducted

Here are the answers and the percentage of respondents who answered correctly and incorrectly.

In fact, only 1 percent of surveyed taxpayers answered all six correctly. As you can see, outplacement firm fees, some résumé expenses, and traveling for interviews can be deductible. This means that you could be hurting yourself financially but not claiming them, or at the very least you’re not taking full advantage of the financial options available to you.

Perhaps more surprising is how confused taxpayers are when it comes to who has to file taxes and who doesn’t. For example, 43 percent of taxpayers thought unemployed workers can delay paying their income taxes, and 44 percent thought health care costs are tax deductible for anyone unemployed. Neither is correct. Even unemployed taxpayers must pay their taxes on time and their health-care costs are not tax deductible.

If you’re searching for a job, and especially if you’re unemployed, money is probably tight. However, if you can afford to have a professional prepare your taxes for you, you should because they probably have other tips to help you save money due to your job search. And if you can’t, you can always do some digging to see what is and isn’t deductible, both job-related and not. (The full survey is an interested read if you have the time.)

How are your taxes coming along? Are you waiting until the last-minute to file them or are you doing them now in hopes of receiving a refund? Do you have any other tips for fellow job seekers come tax time? Leave them in the comments!

(Also feel free to lament the fact that W-2s are just generally depressing. If you’ve been unemployed, the number is a major bummer. Or your take-home isn’t as big as it should be. Or your total earnings seem small for all the hard work you put in. Whatever it is, let this be your tax season therapy.)

  1. The deductions don’t begin and end with your minor expenses. As well as the small costs of printing, postage, etc, large expenses associated with the job hunt can also be deducted.

    The two primary “major expenses” are as follows:

    1. EDUCATION – If you went back to school before taking a new job, your educational expenses can be curbed with tax deductions. Based on your adjusted gross income, you could be eligible for deductions of up to $3,000.
    2. MOVING – Once you have finally found that new job, some of your moving expenses may be deducted for tax purposes. The only eligible expenses are ones that your current employer did not already cover. Furthermore, moving costs for a new job are only deductible if your new place of work is at least 50 miles from your old home. If these requirements are met, things like packing costs, mileage expenses, parking fees, tolls, and lodging while traveling are all tax deductible.

  2. What about meals. I traveled out of state for 6 weeks looking for a job. Is anything other than the mileage driven deductible? I stayed with family, so I have no hotel stays. I’m curious…thanks..

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