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When you’re looking for a job after 50, you need all the breaks you can get, and depending on your situation, you may qualify for federal and state income tax deductions to help offset your job-hunting costs. Be obsessive about saving receipts.
Job-hunting deductions apply only to searching for a job in your current field. If you’re switching careers, they’re verboten.
Depending on your situation, you may be able to itemize your expenses for a tax deduction, using Form 1040 and Schedule A. You can claim a federal tax deduction only for job-hunt costs exceeding 2 percent of your adjusted gross income. That being said, you should definitely seek professional tax help for your situation. Here are a few deductions that may apply:
Outplacement and employment agency fees: These costs are acceptable whether or not you land a new job, assuming, of course, that you’re looking for a job in the same line of work. Career-coaching fees may also be deductible.
Résumé preparation and postage: Paper, ink-jet cartridges, fees paid to a résumé writer, printing costs, and postage are all probable write-offs.
Dues, subscriptions, and association fees: Membership dues to professional organizations and subscriptions to certain industry publications may be deductible if you use the services provided in your job search. If challenged, you will need to show documentation that a job board at your professional association, for example, was a direct source of leads for you.
Business travel: You can deduct the IRS standard mileage rate if you use your personal vehicle for business, but be sure to keep travel mileage logs in case you’re asked for documentation. Airfare, train tickets, and taxi fare are deductible, provided they’re specifically related to your job hunt. You can’t, for instance, take a five-day trip to Washington, D.C., to visit the museums, spend a single day interviewing, and then count the entire trip as a write-off.
Business meals: If you’re job searching and meeting with sources or other business contacts, keep track of whether you pick up lunch or coffee, as 50 percent of the total cost of those meals can be deducted.
Moving costs: If you accept a job that requires you to relocate, you may be able to write off all expenses associated with your move if your new employer doesn’t offer to reimburse you. Your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you use your vehicle to move, you can deduct mileage. For more information, see IRS Publication 521 “Moving Expenses.”
Internet access: You should be able to deduct work-related Wi-Fi expenses and fees for online job sites and networking services such as LinkedIn (if you upgrade to a paid, professional account). Again, you must be able to show evidence that these were tools used in your job search.
Home office deduction: If you’re working as a freelancer, contract worker, or consultant while you pound the pavement for a new full-time gig, you can write off some of your home office costs if you have set aside a specific place solely for work. You must file Form 8829 “Expenses for Business Use of Your Home.”
The IRS now allows a “Simplified Option for Home Office Deduction,” which permits you to deduct $5 per square foot of your home office on your tax return, with a maximum write-off of $1,500 (based on a maximum of 300 square feet). It is usually a better option to take the traditional home office deduction. You should run the numbers. You can read all the home office rules in IRS Publication 587, “Business Use of Your Home.”
Skill building: The cost of job-search seminars and networking events is generally deductible, but again, you must be certain you can prove that they’re connected to your job search. Tuition money to acquire or improve job skills may qualify for the Lifetime Learning Credit, which has limitations and income restrictions that are explained in IRS Publication 970, “Tax Benefits for Education.”