Articles

Changing Jobs can Yield Tax-Saving Benefits by Flor Escudero, CPA

Posted on October 03, 2017

Workers seeking new career opportunities in their current fields may be able to deduct certain expenses related to their job hunt even when they do not ultimately secure a new position. Qualifying job-search expenses are considered miscellaneous deductions that taxpayers may report on IRS Form 1040, Schedule A, Itemized Deductions.

To qualify for a tax deduction, job-search expenses must not be related to a new line of work, a first-time job or a search for employment that occurs after a long break in time after the conclusion of a prior job. Rather, deductible costs are limited to those expenses that are incurred when a taxpayer hunts for a new job in his or her existing industry or profession. This includes costs for writing and preparing resumes, fees paid to employment agencies or staffing firms, and unreimbursed travel and transportation expenses for out-of-state career opportunities.

Deducting job-search expenses are also limited to an amount that is more than 2 percent of a taxpayer’s adjusted gross income (AGI), which can be found on line 38 or IRS Form 1040 or line 37 or Form 1040NR. Generally, the 2 percent limit applies after a taxpayer applies all other deduction limits. Therefore, a taxpayer with $50,000 in AGI must have more than $1,000 in miscellaneous expenses before they may take any deductions. If the taxpayer’s miscellaneous expenses total $1,500, he or she will be able to deduct $500 during that year.

Searching for a new job can be stressful and costly, especially when it involves travel and a potential move to a new location. Individuals should seek the counsel of experienced tax professionals to identify opportunities where they may reap tax savings and potentially reduce their taxable income.

About the Author: Flor Escudero, CPA, is a senior manager of Tax Services with Berkowitz Pollack Brant, where she provides domestic and international tax guidance to high-net-worth individuals and businesses. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.