How to Write Off Your Job-Hunting Expenses

If you looked for work this year, you may be able to deduct job-hunting expenses from your 2011 federal income tax return.

The operative word is "may." To qualify, the IRS makes people jump through so many hoops that few actually do.

As discouraging as that sounds, you still should crunch the numbers. If you don't, you could give the government more money than you need to, says Julian Block, an attorney and onetime IRS special agent. Block has written extensively about taxes, including a 2011 book, Julian Block's Tax Deductible Travel and Moving Expenses: How to Take Advantage of Every Tax Break the Law Allows.

To be eligible to deduct job-hunting-related expenses, Block says you must:

• File the longer, more complicated IRS 1040 form
• Use Schedule A (pdf) of the 1040 form to itemize deductions
• Not be subject to the alternative minimum tax
• Have job-hunting and other miscellaneous expenses on Schedule A that are more than 2 percent of your adjusted gross income; expenses under 2 percent aren't deductible.

One more caveat: You can only deduct job-hunting expenses if you looked for a new position in the same line of work, Block says. "The person looking to take these deductions should understand going in [that] it's a tough go," he says.

In an interview with Second Act, Block shared other advice on how to tackle job-hunting expenses come tax time:

SA: What are typical job-hunting expenses?
JB: They're things like fees paid to a career counselor, expenses for resumes and postage for mailing applications, which might seem like an anachronism in the internet age. Also faxes, phone calls, ads in newspapers, trade magazines and websites.

SA: What about paying for premium membership on LinkedIn so you can email prospective employers who aren't your connections?
JB: Sure, that would qualify as a job-hunting expense because the individual is incurring the expense to find out about jobs.

SA: How about joining professional organizations?
JB: If you're a health-care professional, for example, and you join an organization for health-care professionals and your employer doesn't reimburse you for that expense, you could deduct that. The deduction would be for an unreimbursed employee business expense, which is a separate miscellaneous expense on Schedule A. And you could claim that as an expense even if you weren't doing a job search.

SA: What can you deduct if you travel to look for a job?
JB: If you used your car, you could take a deduction for mileage, which was 51 cents a mile for the first half of 2011, and 55.5 cents a mile for the second half. If you pay for parking, it's deductible. Parking tickets aren't deductible. If you park in a garage, the tip you give to an attendant is. You can also deduct for airplane, taxi and train fares. If you're going out of town for a job interview and you're not reimbursed for your expenses by the prospective employer, you can deduct 100 percent of your lodging and 50 percent of the cost of your meals.

SA: What about trips you take that are partly for fun and partly to look for work?
JB: If you go to Orlando for a week and spend six days at Disney World and one day job hunting, you'd deduct one-seventh of your lodging as a job-hunting expense. If you live in St. Louis and go to Los Angeles for vacation, and while in Los Angeles fly to San Francisco for a job interview, you can only deduct the flight from Los Angeles to San Francisco.

SA: Suppose you paid for child care while you traveled to an interview appointment?
JB: Payments to babysitters don't qualify as job-hunting expenses. But they might qualify under the separate child-care credit.

SA: Are there job-hunting expenses people assume are deductible that really aren't?
JB: You can't deduct the cost of clothing that's suitable for everyday use. If you buy a suit for an interview that you could wear off the job, that's not deductible. If you're interviewing for a job as a firefighter or policeman and buy a uniform, it would be, but it's unlikely you'd have to buy clothing to go on a job interview.

SA: Can you deduct the cost of training classes?
JB: You can take a deduction for educational expenses that help you improve or retain existing skills. You can't take a deduction for expenses that qualify you for a new job. For example, if you teach Spanish in high school and you take courses to qualify you as an instructor in French, that's deductible. But if you're a real estate broker and you take courses to become a high school teacher, those expenses aren't deductible.

SA: Why can't you deduct the expenses of looking for a job in a new field, which is fairly common for midcareer professionals?
JB: That's the way the IRS reads the law. If you find a new job in the same line of work but end up staying in your old job, expenses you incurred would be deductible. If you were unemployed at the time you were looking, the IRS says your occupation is whatever you did for your last employer. There's a narrow exception: If you worked in different kinds of jobs before, it would be OK to look for any of those past positions, provided they were recent, to establish that you were looking for a new job in the same line of work.

SA: What's the best way to keep track of expenses?
JB: Write checks or use a credit card. If you're paying for things in cash, keep a log of what, when and why you spent. That way, if you claim them as deductions and your return is audited and the expenses are questioned, you have something to substantiate them. It could be the type of work sheet that accountants use, but it doesn't have to be elaborate. Just write it down and keep it. Also, keep a log in your car's glove compartment to record odometer readings for when you take job-hunting trips.

Read more: 10 Hot Jobs for Career Changers