I was laid off three months ago and have been searching for a new job. Can I deduct on my tax return the money I've paid an employment agency to help me find a new job? Also, I may have to fly to another state for a job interview, but I'd have to pay the travel expenses myself. Are those expenses deductible, and does it depend on whether I eget the job?
As long as you're searching for a new job in the same line of work, employment and outplacement agency fees are deductible, as are travel expenses if the trip is primarily to look for a new job. It doesn't matter whether you get that job. Even if you just need to drive across town for a job interview, you can deduct your mileage -- 58.5 cents a mile for travel on July 1 or later; 50.5 cents per mile for the first half of 2008. You can also deduct the cost of printing and mailing résumés.
You can't deduct job-search expenses for your first job or for a job in another line of work.
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This write-off is considered a miscellaneous itemized deduction (like employee business expenses and investment-related expenses) and is deductible only if you itemize your deductions on your tax return (reported on Schedule A of your 1040). Only miscellaneous expenses that exceed 2% of your adjusted gross income are deductible. For more information about these write-offs, see IRS Publication 529 Miscellaneous Deductions.
If you get a new job in another city, you may be able to deduct your moving costs -- even if you don't itemize. To qualify, the new job must be at least 50 miles farther from your home than your old job was. You can even take this deduction if you're moving for your first job -- as long as the new workplace is at least 50 miles from your old residence. For more information, see IRS Publication 521 Moving Expenses.
For more information about job-related tax issues, see Tax Deductions and Expenses of Changing Jobs.
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