Do the new 2018 tax rulings affect 2017 job search expenses?
With the recent passage of new tax laws, some are worried about what it means when filing taxes for the 2017 fiscal year. The good news? The law doesn’t affect your 2017 tax filing. As far as deducting job search expenses go, you won’t be able to do that for your 2018 tax filing.
There are just a few rules to keep in mind:
- You must search for jobs within your same profession path. Meaning if you’re a warehouse worker right now, you can’t deduct expenses incurred looking for a social media job. Same goes if you’re a nurse looking to get into accounting.
- Don’t let too much time pass between your last job and your new one. If you got a new job but the job search lasted too long, you can’t deduct those job expenses.
- The IRS doesn’t specify how long this “substantial break” is, but notes that situations like stay-at-home moms getting back into the workforce after years at home do not qualify.
- If this is your first full-time job, expenses are not tax deductible. You must be progressing on your career path in a given position.
- If you’ve already had the expenses reimbursed in some way, they are not deductible.
And as for how to deduct them? Job search tax deductions must be claimed as miscellaneous deductions.
What then, are you able to deduct? Efile.com has the answers.
Employment and Outplacement Agency Fees
Some employment or outplacement agencies charge a fee for their services (Express Employment Professionals never does). Depending on your situation, and so long as you’re looking for a new job in your current profession, those fees may be deductible. Any agency fees paid back by your employer, however, will be taxable after the fact.
Certain moving expenses may be tax deductible. However, this is subject to two requirements (these requirements are waived if you are a member of the armed forces moving due to permanent change of station):
- Your new job must be at least 50 miles farther from your previous home than your old job was from that home. If your old job was 5 miles from your old home, your new job needs to be at least 55 miles away from that home.
- For one year (12 months) after you move, you must work full-time for at least 39 weeks. If you are self-employed, you must additionally work a total of at least 78 weeks in the two-year (24 months) period following your move.
- So long as you are on track to meet these goals, you can deduct your moving expenses prior to completing them.
Travel and transportation expenses are a gray area when it comes to deducting job search expenses. For travel expenses to be deductible, the main purpose of the trip must be for job searching, such as company research or a job interview. However, even if the trip is not completely devoted to job searching, some expenses may still be deductible. Your ability to deduct them will depend on how much of your trip was devoted to job search vs. how much time was spent doing other activities.
This article is purely informational and should not be taken as financial advice. As no two situations are the same, you will need to follow up with an accountant/financial advisor to see if your job expenses qualify as tax deductions.
Have any other questions about which job-search expenses are tax deductible? Let us know in the comments below!