If you’ve recently sought new employment, you may be able to offset some of the expenses related to the search. Expenses related to job hunting may qualify for a deduction on your individual income tax return. If you move for business or employment purposes you may be able to deduct many of the expenses incurred. Potential deductions include the cost of travel and moving your household goods and personal effects.
If you are seeking a new job in your same occupation, you may be able to deduct the following expenses incurred in your search:
- The cost of résumé preparation and mailing.
- Travel – If your job search requires travel, you may be able to deduct some or all of the travel expenses.
- Fees paid to job placement agencies.
It is important to remember that these deductions are only available to taxpayers seeking new employment in their current occupation, not to individuals seeking a first job in a new line of work.
When you move for business or employment purposes, many of the following expenses incurred may qualify for tax deductions:
- Moving your household goods and personal effects (this also includes reasonable storage costs incurred during the move).
- Travel to your new residence (this includes lodging, but not meals).
In order to deduct moving expenses, the IRS requires that three basic tests are met. These tests are the distance test, the time test, and that your move closely relates to the start of work. These can be met as follows:
- The distance test – The general measure for this test is that your new place of employment/business is at least 50 miles further from your previous residence than your former workplace was from your previous residence. If this is your first job, your new job must be at least 50 miles from your previous residence.
- The time test – The basic requirement of this test is that you work at least 39 weeks of the following twelve month period, in the area of your new residence.
Your move closely relates to the start of work – There are two parts to this requirement.
- While there are a few exceptions based on circumstance, the move must generally occur within one year of starting the new job.
- You will save time/money commuting from your new residence to your new place of work, or you are required to live at your new home as a condition of your employment.
A great resource for information on the deductibility of moving expenses is IRS Publication 521.
If you have any questions on deduction, don’t hesitate to reach out to us.