The current unemployment is still hovering around 9.6% and there isn’t a day that doesn’t go by that I don’t talk to someone who is directly or indirectly affected. If you have been hitting the pavement looking for a new job, you need to be tracking the expenses you incur during your search. Some costs of a job hunt may be tax deductible when you file your income tax return.

Searching for a new job in the same kind of industry will allow you to deduct expenses like phone calls, resume preparation services, and career counseling sessions you pay for out of pocket. You can still be employed during your search and still have your expenses deducted by only the amount that exceeds 2% of your income will be eligible. You may also be eligible to receive the expense deductions even if you did not end up getting the new job.

What Can Be Deducted When Job Hunting?

• Agency Fees If you use the resources of an employment placement agency, fees that you pay can be deducted. The only catch with this deduction is that if your employer pays you back for the agency fees incurred, you must then include the amount as part of your gross income on the following year’s taxes. You may not include agency fees as a deduction if your employer has paid the fee.

• Resume Preparation Costs associated with typing, printing, and mailing out copies of your resume can be deducted as long as you are looking for a new job that is the same as your current job. Costs involved in hiring someone to help with your resume would also be tax deductible. You may also include advertising expenses and charges for professional photographs if applicable.

• Travel Expense If you are traveling to a new location to look for work in your present occupation, you may be able to deduct the amount of travel expenses. Expenses can include mileage, airfare, meals, and room accommodations.

• Phone Calls Fees incurred for long distance phone calls to potential employers are deductible. Make sure to keep all your phone records to make it easier at tax time.

Moving Expenses

What happens if your new job takes you out of town? If so, there might be some expenses that will be tax deductible. The biggest distinguising factor is how far your new job is. Your new job has to more than (pay attention here) 50 miles farther away from your hold home than the distance from your old home to the old work location. A little confusing, huh? Here’s another way of looking at. Currently, my job is about 15 miles from my house. If I took a new job, for me to get a tax deduction my new job would have to be at least 65 miles from my old home. Clear as mud? Good

The last part of deducting moving expenses is how long you work at the new job. You must continue to work in the new location for at least 39 weeks during the 12 months after the move. If you’re self-employed you must also work in the new job for 78 weeks during the 24 months following the move. (There are exceptions for disability, layoff, transfers, and other situations.)

You may include the cost of transportation and storage of your household goods for up to 30 days, as well as travel and lodging from the old home to the new home (only one trip per person).

I had some clients that had moved out of state thinking that the move was permanent. After a few months, they realized the error in their decision and decided to move back. Luckily, they hadn’t filed their taxes yet so an amendment wasn’t necessary.

What Can Not Be Deducted

No Deduction For You!

Certain expenses are tax deductible provided you are seeking employment in your present occupation but there are scenarios where the deductions will not be allowed including:

• You are looking for a new job in a different industry or occupation
• You have not held a job in an industry for an extended amount of time so that your new job will be considered as a position in a new occupation
• You have a sizeable lapse in work history from the end of your last job until the time you have started to look for a new job
• You are looking for your first job

Keeping Track

When you begin a new job search, you should keep a separate file for your job search-related expenses. Tally expenses on a spreadsheet and save all receipts for postage, gas or travel related expenses, and copy/typing expenses. Examine all billing statements such as the phone bill and highlight the job-related phone calls made that resulted in charges and make copies to keep in your file. When you are ready to file your income taxes, consult with a tax professional to discuss which expenses are justifiable and present all receipts and billing statements. Do this and you and your tax preparer will thank me later.

Did you know that you may be able to deduct some of your job search expenses on your tax return?

Many taxpayers spend time during the summer months updating their résumé and attending career fairs. If you are searching for a job this summer, you may be able to deduct some of your expenses on your tax return. Here are six things the IRS wants you to know about deducting costs related to your job search.

1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses incurred while looking for a job in a new occupation.

2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year.

3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.

4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.

6. You cannot deduct job search expenses if you are looking for a job for the first time.

This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

photo credit: Robert S. Donovan

Turning the age of 30, I now reflect back at some of the key choices that I made to put me and my wife in the prime financial situation that we’re in. As a college student, I started to walk down the path as many of my peers accumulating student loan and credit card debt at ease.  Luckily, I stumbled into a career as a financial planner and was able to see the error of my ways.  When I look back, I can attribute five things that I did that made a huge difference into where I’m at today. These are five smart money decisions that anyone can do as long as they have a willingness and discipline to do so.

1. Avoid Debt Like the Plague

Most college students graduate with a combination of student loan and credit card debt. Most of us are just kind of brain washed into thinking this is just the way it is, that everybody should graduate college with student loan debt. Luckily, with the aid of the Illinois National Guard and the realization that my student loans were mounting, I was able to graduate college with no student loan debt and very minimal credit card debt. Doing so was a huge relief in starting my career of not having to worry about making those loan payments back.

2. Don’t Buy a House Immediately

I know a lot of people that once they start their first job, they start searching for their first home. I, on the other hand, continued to share rent with some of my buddies in the house that I lived in while I was in college. I did this for a few years in my working career to help ease the monthly payment. Reflecting back I realize now that that put me in such a financial position to be able to be able to buy the first that we really wanted.

2. New Ride Equals No Savings

I don’t know how many of my former college classmates that I knew that were going to buy a brand new car once they graduated. I remember talking to a girl in one of my accounting classes about how she’d already picked out the car of her dreams. I remember telling her, “If you wait just a year or two to buy that car, you can invest that $400 a month payment into your Roth IRA. That will make such a huge difference for you down the road”.  She did not listen and went out and bought her car and, as far as I know, was unable to contribute to any retirement plans including the Roth IRA.

The Lu...

I, on the other hand, continued to drive my  champagne colored 1998 Chevy Lumina that was a hand me down from my grandmother (Pictured above, isn’t it sweet?) . Although it wasn’t the car that I had envisioned driving once I graduated college, it had very low mileage and, most importantly, was reliable. Also, by not having that $300 to $400 a month car payment, I was able to contribute to not only my 401(k), but also my Roth IRA on a systematic basis. That has allowed me sock away a considerable amount in both my retirement plans.

4. Big Screen Looks Sweet, But It Can Wait

I don’t know how many times I visited Best Buy while I was in college and drooled over the new flat-screen HD TV’s that were out. I wanted one so bad I could taste it. So many times, I pondered doing the 0% interest promotion that they always

advertised. I mean it’s only like $20 bucks a month, right?   Thank goodness I didn’t buy into that philosophy. By postponing some of those major purchases such as the big-screen TV, I was able to, once again, put away money in my retirement account and not worrying about following into debt trap that most people find themselves in.

Do I own a flat screen today?  Of course I do.  The best part by waiting, I was able to receive it as a wedding gift from my mother.  Now I have my flat screen TV and no payment.

5. Invest, invest, and invest some more.

All the things I listed above allowed me to invest my retirement accounts. I’ve been able to sock away a good chunk into my 401(k) s while I was with my previous employer, and also been able to max out my Roth IRA for the last five years. That has been a huge blessing to getting me into my path into financial independence. Anybody can follow these same steps. You just have to have a little will power.

This was originally a guest post at Gen X Finance. Thanks to Jeremy for originally posting it on his blog.  You can see the original article here.