Claiming Job Search Expenses on Your Tax Return

Looking for a job or just want to change companies? If you stay in your same line of work, you might be able to claim those job searching costs as a deduction on your tax return.

This is a list of a few things the Internal Revenue Service wants you to consider:

1. The costs must be in the same line of work. So, if you’re a plant supervisor, the IRS won’t reimburse you because you want to be pastry chef now.
2. Bonus, you may deduct any fees paid to an employment agency or head hunter while searching for that new job.
3. Need to mail out resumes? Duplication fees, printer ink, postage, etc. are all deductible.
4. If you have travel expenses while looking for that new job, deduct it. Keep in mind, don’t take a vacation to Florida and try and hide it as job searching. However, if you can prove it was primarily for the employment search, go for it. Just don’t complain if you have supply proof during an audit.
5. Don’t deduct any expenses if you’ve been sitting on your butt for 9 months then all of sudden you read this and start saving recipes. I ain’t gonna fly. There can be no significant time between needing a job and looking for a job.
6. If you’ve not worked before, stop reading this. You can’t take any deductions. First time job seekers don’t qualify.
7. File for job hunting expenses as a miscellaneous itemized deduction. You only are allowed to claim the amount of your total miscellaneous deductions that go past 2% of your adjusted gross income.

The Internal Revenue Service today announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.

In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

“This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction,” said Acting IRS Commissioner Steven T. Miller. “The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013.”

The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option. 

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted today on IRS.gov.

The standard mileage rate for transportation or travel expenses is 56.5 cents per mile for all miles of business use (business standard mileage rate).

The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization.

The standard mileage rate is 24 cents per mile for use of an automobile for medical care or as part of a move for which the expenses are deductible.

BASIS REDUCTION AMOUNT

For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 21 cents per mile for 2009,

23 cents per mile for 2010, 22 cents per mile for 2011, 23 cents per mile for 2012, and 23 cents per mile for 2013.

MAXIMUM STANDARD AUTOMOBILE COST

For purposes of computing the allowance under a FAVR plan, the standard automobile cost may not exceed $28,100 for automobiles (excluding trucks and vans) or $29,900 for trucks and vans. See section 6.02 of Rev.

This notice is effective for deductible transportation expenses paid or incurred on or after January 1, 2013, and mileage allowances or reimbursements paid to an employee or to a charitable volunteer on or after January 1, 2013, and for transportation expenses the employee or charitable volunteer pays or incurs on or after January 1, 2013.

If you are itemizing the deductions on your tax return instead of claiming the standard deduction, you may be able to claim certain miscellaneous deductions. A tax deduction reduces the amount of your taxable income and generally reduces the amount of taxes you may have to pay.

Here are some things you should know about miscellaneous tax deductions:

Deductions Subject to the 2% Limit. You can deduct the amount of certain miscellaneous expenses that exceed 2% of your adjusted gross income. Deductions subject to the 2 percent limit include:

• Unreimbursed employee expenses such as searching for a new job in the same profession, certain work clothes and uniforms, work tools, union dues, and work-related travel and transportation.
• Tax preparation fees.
• Other expenses that you pay to:
  • Produce or collect taxable income,
  • Manage, conserve, or maintain property held to produce taxable income, or
  • Determine, contest, pay, or claim a refund of any tax.
• Examples of other expenses include certain investment fees and expenses, some legal fees, hobby expenses that are not more than your hobby income and rental fees for a safe deposit box if it is not used to store jewelry and other personal effects.

Deductions Not Subject to the 2% Limit.  The list of deductions not subject to the 2% limit of adjusted gross income includes:

• Casualty and theft losses from income-producing property such as damage or theft of stocks, bonds, gold, silver, vacant lots, and works of art.
• Gambling losses up to the amount of gambling winnings.
• Impairment-related work expenses of persons with disabilities.
• Losses from Ponzi-type investment schemes.
• Qualified miscellaneous deductions are reported on Schedule A, Itemized Deductions. Keep records of your miscellaneous deductions to make it easier for you to prepare your tax return when the filing season arrives.

There are also many expenses that you cannot deduct such as personal living or family expenses.

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