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Ways to Save on Your Job Hunt — Deduct Your Expenses

Looking for a new job – particularly when you don’t have a current job – is not a lot of fun.

Fortunately, there is a way to lessen the pain a bit, at least financially.

As you continue your job search, you are able to deduct certain job-hunting expenses. Most people know that they can deduct moving expenses for moving; I bet few realize they can also deduct these sorts of expenses.

1. Who Qualifies

If you’re a banker and wanna be a baker, you’re out of luck. The IRS only allows deductions for job searches related to finding a job in one’s current or previous occupation. It’s the nature of the job that matters; if you’re a journalist (ahem) who worked at a newspaper and now are looking at online opportunities, that’d qualify. However, looking at a marketing position would not.

It also doesn’t matter if you’re working a part-time position in another field while looking for full-time work in your chosen field; this is likely grounds for deducting job-hunting expenses.

However, you can’t deduct expenses if you’re looking at a job after graduating college (it’s considered a new occupation), or you’ve had a long period of time off for things like travel.

2. Expenses That Qualify

Some things you can write off:

* Headhunter or employment agent fees
* Travel expenses for interviewing, which includes 50% of meals while out of town. This includes airfare and lodging, but the primary reason for the trip MUST be job-hunting.
* Any expenses to do with resume preparation – a professional to help prepare them, paper costs, and postage costs.
* Driving expenses for interviews and such get the standard IRS business mileage allowance of 55 cents per mile.
* If you’re researching starting a business, that’s also an allowable deduction.

Some things you can’t deduct: Anything you might normally pay for if you weren’t searching for a job, like any personal health expenses (haircuts), or Internet or cellphone costs.

3. To get the deduction

You have to itemize the expenses as ‘miscellaneous itemized deductions.’ And these expenses (which also include other expenses like investment expenses and tax preparation services) must exceed 2% of your adjusted gross income.

In other words, you need a pretty significant amount of job hunting expenses to qualify. However, if you’ve been out of work for awhile, you might meet it because your income is lower than usual. Also, the first $2,400 of unemployment compensation benefits received in 2009 is not included in your AGI.

For more information, talk to your accountant or talk to the IRS.

Related Stories:

What Moving Expenses You Can Deduct

Negotiate a Relocation Package

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