Do you qualify for tax deductions from your 2015 job search in hospitality?
“In this world nothing can be said to be certain, except death and taxes,” or so said Benjamin Franklin, scientist, inventor, and author. Fortunately for you—oh lucky job seeker—if you spent time searching for a new hospitality position in 2015, you may be able to deduct the costs associated it come April 15. That means reducing your total taxable income and forking over a smaller pile of cash to old Uncle Sam. Of course, there are a few caveats.
The deduction is not allowed if you’re changing careers. Your search must have been for a new opportunity in the same occupation. This means you won’t qualify if you made a move from teaching elementary school to working in a restaurant kitchen, or from managing a bank to coordinating events on a cruise ship. However, if you were already in the hospitality industry and were looking for another job in the same career, you may be able to take the deduction—even if you didn’t succeed in your search. Note: the deduction is also not available to you if you are a first-time job seeker.
You cannot deduct anything and everything. Though you may have needed new clothes, a stylish haircut and a little Botox to prepare for your job interviews, you cannot deduct those expenses. Per a number of sources, the ones you can write off include:
Travel expenses (such as mileage, parking, flight, and hotel)
Preparing, printing, and mailing your resume
Job search website fees (such as LinkedIn Premium for job seekers)
Employment and outplacement agency fees
Childcare (while you’re at interviews, etc.)
Moving (if your new job is 50 or more miles away and full time, you can deduct all
Training and seminar fees
Career counseling fees
You cannot take the job search deduction if you took “substantial” time off. Though the IRS does not define “substantial,” you do not qualify for the deduction if there was a significant break between when you left your last job and when you began to look for a new one. This may be an issue if you’re returning to the workforce after raising children, going back to school full time or caring for an aging family member.
You cannot take the standard deduction. If you want to try for the job search deduction, you must itemize your tax deductions. However, if you’re paying interest on a mortgage or student loans, you probably do so anyways.
You must have enough miscellaneous expenses to qualify. Job search expenses fall under the category of miscellaneous expenses according to the IRS. Added together, all deductible miscellaneous expenses must be more than two percent of your adjusted gross income. If you earn $40,000 a year, the threshold is $800. If you earn $50,000, it’s $1,000—and so on. Other miscellaneous expenses you can use to get across the threshold include unreimbursed employee expenses (such as professional society dues), tax preparation expenses and other expenses (such as investment fees and expenses, trustee’s fees for an IRA and loss on a traditional or Roth IRA).
Tax experts recommend that you keep detailed records of everything you spend on your job search. This means diligently saving your receipts. A spreadsheet that notes what you did on your search each day can be helpful. You’ll need adequate documentation to prove your eligibility should the IRS choose to audit you.