Deducting Job Search Expenses

In this economy, many individuals are looking for jobs and may incur some expenses along the way. While it may seem unfair, you can only deduct expenses to search for a job that’s in the same occupation as the last one you had (or the one you still have if you’re looking for a better position). If you pass this “same occupation test,” you can potentially deduct the expenses (subject to the 2%-of-AGI miscellaneous itemized deduction limitation). You can also deduct expenses to look for a new job in the same occupation even if you’re temporarily working in another field. And you can deduct expenses to look for full-time work in your existing occupation while you’re working part-time or sporadically in the same line of work.

Some examples of deductible job-hunting expenses include employment agency or headhunter fees, travel costs, resume preparation, copying, postage, and long-distance calls (but only if you have to pay extra for them). If you drive in connection with your search, you can deduct the IRS business mileage allowance. But keep this in mind: transportation expenses to go out of town are only deductible if the primary reason for your trip is the job search. You can’t deduct expenses that are reimbursed by a prospective employer or a future or past employer.