With the country’s unemployment rate hovering near 10 percent, it’s really no wonder the Internal Revenue Service recently published some instructions for jobseekers concerned about getting tax deductions for their labor.
If you’re currently out of work and spending time and money in your efforts at getting back on the employment bandwagon, it’s important to know what you can and cannot write off come tax time (and what sort of documentation you should be filing away).
Here’s a look at the pointers from the IRS:
- Current occupation: In order for job search-related expenses to be considered deductible, they must be for a job in which you’ve already been employed. So if you’re taking classes to learn a new skill that you hope will get you into a different line of work from your last one, you can’t write tuition off. If you’re going to career fairs intended for people in your line of work, related expenses would likely be deductible.
- Employment agency fees: If you’re paying fees to an employment or outplacement agency, those costs are tax-deductible as long as the agency is helping you find a job in your former field of employment. If, in a later year, your employer reimburses you for such fees, you must include that amount in your gross income (up to the amount of your tax benefit) in that tax year.
- Résumé preparation fees: If you’re preparing and mailing résumés to potential employers, the money you spend http://www.totalbankruptcy.com/life-after-bankruptcy/stay-debt-free/control-your-spending.aspx is tax deductible as long as you’re applying to jobs in your former field of employment.
- Travel costs: Should you travel in order to look for work, the expense of your trip to and from that destination is considered deductible as long as you’re seeking a job of the type you already had. A job-seeking (and thus tax-deductible) trip can be distinguished from a personal trip by the amount of time spent doing job-related activities versus the time spent on personal activities.
- Elapsed time: Job search expenses are not considered deductible if there is a “substantial” break between your last period of employment and your current job search.
- First time: Those looking for employment for the first time cannot deduct job search expenses.
So what does this mean if you’re currently looking for work? Make sure to hang on to receipts from any expenses (like copying costs) you have from your job search. Save documentation of travel (e.g. gas money, food, convention costs, etc.) and keep all these documents together so that when tax time comes around, you can access it easily.
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Tags: Seekers
Posted July 20, 2010 by Amelie Hampton under Bankruptcy Articles