Tax Tip #2: Are you looking for a new Job?
Job Hunting Expenses:
The costs of looking for a new job can be a tax deductible expense. For this to apply, the taxpayer would have to search for a new job in the same line of work. The deductible expenses can include the costs of job placement & agency fees, or travel expenses associated with the job search, or the costs of preparing and mailing their resume, etc. The expenses must be incurred for a job in their current line of work. The taxpayer cannot deduct expenses for a search in a different occupation. In addition, expenses cannot be deducted if the taxpayer has been reimbursed, or if they are looking for a job for the first time, or if there has been a long break between the end of their last job and the time the new job search began.
In the event that the taxpayer has to move to a new home because of a new job, the moving expenses maybe tax deductible, assuming that specific requirements are met. First, the move must be within a year of the start date for the new job. Second, the taxpayer would have to meet a distance test. This means that the new job must be at least 50 miles farther from the taxpayer’s former home. For instance, if the distance from the former job and the former home was 5 miles apart, the new job must be at least 55 miles from the taxpayer’s former home. Lastly, a time test would have to be met. This means that after the move, the taxpayer must work full-time, at the new job, for at least 39 weeks during the first year. However, if the taxpayer is self-employed, they must work at least 78 weeks during the first two years. The expenses can still be deducted during the current tax year if the time frame is expected to be met. These rules would also apply if the taxpayer move to work at the same job but in a new location.
Deductible expenses include transportation & lodging expenses for the taxpayer and their household members. The cost of packing, shipping, storing and insuring items while in transit can also be deducted, as well as the cost of connecting or disconnecting utilities. However, the cost of entering or breaking a lease, the cost of purchasing a new home or selling a former home and the cost of travel meals cannot be deducted. Further, if the costs incurred have been reimbursed and the taxpayer has already deducted these expenses on their tax return, they would need to include the reimbursement as income in the year received.