Editors' pick: Originally published Dec. 6.
With unemployment at 4.6% according to the recent jobs report, people clearly are working again.
That's great news.
And it's a welcome relief to many, since we all know how grueling the job-hunting process can be on you and your family.
Surprisingly, the IRS has some empathy too. Whether you finally found a job or you're still looking for one, Uncle Sam allows you to deduct some of those out-of-pocket job-search costs so you can get your tax bill down.
The IRS has a ton of stuff about all this on its site, but you don't have time for that - you may still be looking for a job - so here's your quick cheat sheet.
You can deduct your job-hunting expenses as long as you are looking for a job in your current occupation.
So if you're a trader who hates his boss and has started looking for a job at a different brokerage house, you can deduct away.
But if you're a trader who has decided to leave Wall Street and become a middle school English teacher, you're SOL.
Also, if you took off a long time in between jobs - whether it was to stay home with the kids and or volunteer in New Guinea - and decided to start looking for work in 2016, you're also out-of-luck.
And finally, congrats to the high school and college grads out there that are looking for work, but first-time job seekers don't qualify either, according to TurboTax. Sorry.
What Can You Deduct?
If you're looking for a job in your current field, you can deduct things like:
- The cost to have your resume or CV prepared.
- A recruiter's fee (if it is charged to you and not the employer).
- Admission fees to networking events and job fairs.
- Any subscriptions and professional dues that you pay to keep up in your field.
If you had to travel to an interview, you can deduct 54 cents per mile you drove (this is down from 57.5 cents last year).
If you had to fly and stay at a hotel, those costs are deductible too.
"Just document everything very carefully," says Jackie Perlman, principal tax research analyst at H&R Block. That means keep a mileage log and all your receipts.
But the fancy outfit you bought for your big interview? Fuhggeddaboudit.
How Much Can You Deduct?
So no surprise, there's a catch. These expenses actually are subject to the "2% adjusted gross income (AGI) rule," which says that any expenses greater than 2% of your AGI can be deducted.
We have to do a little math.
Let's say your AGI is $40,000; then 2% is $800. So any expenses above $800 are deductible. Assuming your job hunting expenses totaled $1,000, you would get a $200 deduction in this example.
Granted, it doesn't sound like much, but every little bit counts. So tally everything! And be sure to check out IRS Publication 529 - Miscellaneous Itemized Deductions for more details.
Relocation Expenses for Your New Gig
Now while your family may not be so thrilled about having to relocate for your fancy new job, there is an upshot on the tax front. The costs of moving you, your family and your stuff are fully deductible and not limited by any silly rule.
The amount actually is reported right on front page of Form 1040.
Of course, if your new employer reimburses you for the move, you can't deduct a darn thing.
Now while there are no rules that limit your deduction, there are two quirky tests you need to pass to prove you are really moving for work purposes.
The first test is in regard to your commute. It says that your new job must be at least 50 miles farther from your old home than your old job was. So look at the current commute. If you travel 13 miles to work now, your new job must be at least 63 miles from your current home.
The second test is to ensure you're actually moving to work and not just change the scenery.
It says you need to be working at least 39 weeks during first 12 months at the new location. "So you can't be retiring to Florida and try to deduct the moving costs," says Perlman.
If you passed both tests, the costs of the actual move are fully deductible. So include the costs of travel and the movers for your stuff, cars and pets. Even throw in temporary storage of your things if you need to for a few days between homes. And don't forget the all the fees of connecting and/or disconnecting your utilities.
But if you took trips back and forth to your new location to scout out housing and check out the school, those trips are not deductible. Just the moving day is.
Check out IRS Publication 521 -- Moving Expenses for more grist.
Job-hunting can be emotionally and financially draining. So make sure you try to maintain your sanity and get a little of it back.