More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Annuities: Estate Tax The value of certain types of annuities may be included in an estate’s value. Understanding the intricacies of these inclusions is a critically important aspect of estate planning.
If you have been feeling more confident about the job market, or less confident about a current employer, or you’re just plain out of work, there are ways to minimize the costs involved in finding a job. Job hunting can be expensive, particularly if relocation is in the picture. Still, there may be some good news about the money you spend in searching for a new job—from, of all places, the IRS.
Some of the expenses involved in finding a new job are deductible, depending on the circumstances. There are limits, of course, and rules to be followed, but the search for a new employer can pay off in more ways than one if you pay attention to these 7 Tips from the friendly folks at the Internal Revenue Service.
If you like what you’re doing and want to stick with that occupation in a new company, you’re in luck. No fair leaping from doctor to lawyer to Indian chief. Launching yourself along a completely new career path is not deductible; following the road you’ve been on is.
Have to resort to paying an employment or outplacement agency in the course of your job search? As long as you’re sticking with the profession you’re already in, you can write those off.
If your new employer reimburses you later on, say in some future year, you’ll have to own up to it on that year’s tax return, “up to the amount of your tax benefit in the earlier year.”
... And in the cost of preparation. All those resumes you printed out, the envelopes you mailed them in, and the postage that carried them on their way are deductible. The usual caveat applies: same occupation, deduction. Different, not.
If you travel to find a new job in your present occupation, the determining factor is how much time was spent on the actual job search and how much was spent checking out the tourist attractions in the area or visiting Aunt Sadie. If you only spend an evening taking her to dinner or a single afternoon whitewater rafting, but devote several days to scoping out potential employers, you can write off travel to and from the site.
If you decided to take a few months off between jobs, even if you go back to the same occupation you left, sorry. You’re out of luck. If there was “a substantial break between the end of your last job and the time you begin looking for a new one,” expenses are not deductible.
If you’re looking for your very first job, it’s your dime. No deductions.
Even if you fulfill all the conditions for deducting job hunting expenses, you can’t deduct everything. Only those amounts in excess of 2% of your adjusted gross income can be written off. You’ll want Schedule A to figure it all out.
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