September 5th , 2010 - I have incurred a lot of expenses trying to find a job, and I am still looking for one. Which expenses are deductible on my taxes? Are they deductible even for the jobs for which I have interviewed but not been hired?

Expenses incurred seeking a job in your current field of work are deductible, but only if you itemize your deductions instead of claiming the standard deduction. In addition, job hunting expenses are a "miscellaneous itemized deduction". This group of deductions also includes such expenses as tax prep fees, investment expenses, and other employee business expenses. Together your total miscellaneous itemized deductions must exceed 2% of your AGI (Adjusted Gross Income) before you receive a benefit on your tax return.

There is no deduction for expenses for looking for a job in a different field, or if the job seeker has never worked. For example, a chef looking for a job in IT would not be able to deduct job hunting expenses. It also should be noted that if a potential employer reimburses the applicant for any expenses, those expenses are non-deductible up to the amount that was reimbursed whether or not the applicant is hired.

Some deductible job hunting expenses include:
• Employment and outplacement agency fees
• The cost of preparing a resume
• Job counseling and referral services
• Legal expenses to get reinstated on a civil service list of eligibles
• Professional career consultants
• Travel expenses undertaken primarily to look for a new job.

If you use your car to look for a job you can deduct 50 cents per job-hunting mile in 2010 if you own the car and haven't claimed depreciation deductions on it previously. To claim an auto deduction you need a record of each trip including the mileage traveled, the location you travelled to, the purpose of the trip, and the date you travelled. As an alternative to the mileage allowance, individuals who keep records of all auto expenses (gas, insurance, repairs, etc.) can deduct actual expenses plus depreciation (or lease payments), by multiplying the total costs times the ratio of job hunting miles to total miles driven for the year.

If you travel out of town primarily to seek a job, you may deduct the cost of airfare, lodging and 50% of meal expenses.

Job hunting expenses are deductable whether or not you are hired, providing that the expenses are otherwise qualified.

Nondeductible job hunting expenses are those incurred as personal, living, or family expenses. Some of these expenses include:
• The cost of a new suit, shoes, and tie for an interview
• Haircut/Salon expenses
• The cost of newspapers and magazines
• The cost of a phone, fax machine, computer, and phone and internet service.

If you are hired for a job at least 50 miles farther from your current home than your old job was from your current home, you may also deduct job-related moving expenses. These costs are deductible even if you don't itemize your deductions and they are not subject to the 2% AGI limitation. Deductable expenses include the reasonable expenses of moving household goods from the old residence to the new one, and travelling (including lodging but not meals) from the old residence to the new one. Actual automobile expenses can be deducted in the manner described earlier or using a mileage rate of 16.5 cents per mile travelled.

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