Tax Deductions for Travel Expenses While Looking for Work

The Internal Revenue Service has a nice policy of letting you take deductions for the unreimbursed expenses you incur while you're working. An extension of that is the tax deduction for job hunting expenses, although -- as you might expect -- there are plenty of rules and restrictions. You can write off travel expenses for an interview even if you don't get the job, but it might be a stretch to deduct a trip to Hawaii where you spend more time on the beach than handing out resumes.

Job Hunting Rules

The first big rule is that you must be looking for a job in your current occupation. First-time job seekers can't take the deduction. If you are a waitress, you can't write off expenses while trying to land a job as a dental technician. However, if you look for the same job title in a different field, such as an accountant moving from a manufacturing firm to a retail organization, you can take the deduction. If you took a long break after your last job, the IRS may not allow the deductions, so stay-at-home parents looking to re-enter the workforce don't qualify.

Which Expenses?

Only travel expenses relevant to your job search are eligible. You may deduct airfare, car rental, hotel lodging and food. If you drive, you can deduct mileage at the standard business rate: 55.5 cents per mile as of 2012. If you spend time on personal activities or sightseeing during the trip, consider prorating the expenses you claim for the amount of time you spend looking for work. It's wise to keep all receipts from the trip and maintain a log of job-hunting activity while out of town.

Deduction Limits

The IRS limits your deduction to any amount that exceeds 2 percent of your adjusted gross income. If you spent less than that, you don't qualify for the deduction. However, if you have other unreimbursed employee expenses from your current or previous job during the same tax year, the sum may meet the threshold for the deduction. Don't forget to include non-travel expenses such as a fee to have a new resume prepared, courses to brush up on skills, and employment agency fees.

Which Forms to File

Job hunting expenses are taken as itemized deductions on Schedule A of Form 1040. If you're already itemizing rather then claiming the standard deduction, report your eligible expenses on line 21 of Schedule A. If you don't have enough itemized deductions to make itemizing worthwhile, and you take the standard deduction instead, you're out of luck. Unclaimed job hunting expenses cannot be carried over to future tax years.

Photo Credits

  • Girl in airport image by Nikolay Okhitin from Fotolia.com

About the Author

Naomi Smith has been writing full-time since 2009, following a career in finance. Her fiction has been published by Loose Id and Dreamspinner Press, among others. She holds a Master of Science in financial economics from the London School of Economics and a Bachelor of Arts in political economy from the University of California, Berkeley.

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