November 23, 2011
How to write off your job search
With 2012 around the corner, it's time to start thinking about your annual tax return. If you spent part of 2011 looking for a job (or anticipate more of the same in the coming year), you may be able to write off some of your job hunting expenses come tax time.
[Flickr photo by 401K]
For details on how, I spoke with Elizabeth Mance of Accountability Services, a Seattle-based accounting firm
Q. Can anyone looking for a job write off associated expenses at tax time?
Not everyone can claim these deductions. In order for job searching expenses to be deductible, you need to be able to itemize your deductions. The IRS is gives a single person $5,700 in general deductions or a married couple $11,400. Itemized deductions, which usually consist of mortgage interest, real estate taxes, allowable medical bills, and charitable deductions, must exceed $5,700 for individuals or $11,400 for married couples.
So if the job seeker doesn't have those expenses -- for instance, if they're renting -- they're not going to be able to itemize anyway. And even if you can claim job hunting expenses, they are rarely going reduce your taxable income by a significant amount.
Q. So is it even worth compiling receipts and crunching the numbers from your job search expenses?
I think people should spend the time to do it. But don't be surprised if it ends up not reducing your taxes.
Q. Let's talk write-offs. Many people think you can write off clothing and dry cleaning. True or false?
Unfortunately you cannot write off the cost of that new interview suit or the dry cleaning. Those are considered personal expenses by the IRS.
Q. Would that be the same for haircuts and grooming?
It would. Also daycare and babysitter costs, which is a bummer.
Q. What about travel costs?
If you are incurring mileage, or let's say you have a job interview in New York City and you have to fly there for the interview, then by all means you can write it off.
Now if you're on vacation, that's going to be a tough one to sell an auditor. If the majority of the time you're spending there is on vacation, and if while you were there you did some job interview, you can probably get away with deducting the mileage or the airfare but not the rest of it.
Q. How does claiming the mileage you drive to interviews work?
If the company interviewing you does not reimburse for travel, you can write it off. For the first half of 2011 it was 51 cents a mile, and then the IRS moved it up to 55.5 cents. So that can pay off, especially if somebody is traveling down to Oregon for a job interview.
Q. What about stopping for a meal on the way home from an interview?
If you have to have lunch during the interview and it's not picked up by the interviewer, you could write it off. But I would not write off meals associated with traveling to the interview, unless you had to spend the night. For instance, if you had to fly to St. Louis, you could definitely write off the cost of one or two meals.
Q. What other big-ticket tax write-offs should job seekers know about?
Career counselor fees, employment agency fees, resume preparation fees, long distance and cell phone calls, advertising -- let's say you are a CEO who lost their job and you need to advertise in the Wall Street Journal that you're now available. Also legal or accounting fees paid in connection with job hunting -- let's say you're in the middle of contract negotiations.
Q. What about signing up for a job search site? Or using a paid networking service like LinkedIn?
That would be deductible as well. In a way, that's like advertising. Another deduction is if someone has to buy a newspaper or publication for the employment ads.
Q. How about joining a professional association to make contacts?
Dues and subscriptions, absolutely.
Q. What about attending a professional conference to network?
I think you could. If the purpose is truly to meet and connect with potential employers, that in itself is advertising to secure a job.
Q. Is it true that you can't claim expenses if you're changing career paths?
If it's a brand new occupation, that is correct. That unfortunately hits college grads looking for their very first job. They're not going to be able to write that off.
Q. What about claiming education related to your current career?
This is something that you might be able to deduct. An example: Someone's in HR. They can't find an HR job per se doing exactly what they were doing before. But they want to go to school and spend $12,000 to $14,000 to become a life coach. They weren't a life coach before, but they did a lot of counseling in HR.
In IRS publication 970, there's a diagram on page 65. If someone had to spend a fair amount on education in their field or in a relevant field, they could go to that diagram and see if they'd be able to deduct it.
Karen Burns is the author of The Amazing Adventures of Working Girl, a career guide based on her 59 jobs over 40 years in 22 cities.
Kristen Fife is a senior recruiter, career mentor, blogger and resume consultant based in the Seattle area.
Lisa Quast is a certified career coach, mentor, business consultant, former corporate executive and author based in the Seattle area.
Randy Woods writes about job-search tools, networking techniques and other tips to help you land your dream job.
Matt Youngquist is the president of Career Horizons, a career counseling firm.
Natalie Singer is a Seattle writer, editor and small-business owner.
Michelle Goodman is the author of "My So-Called Freelance Life" and "The Anti 9-to-5 Guide."
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