How Your Job Hunt Could Lower Your Taxes

For taxpayers seeking a new job in their same line of work, a tax deduction for some job search expenses may be available. First and foremost, these expenses must be related to a job search in a taxpayer’s current occupation, as expenses related to a search for a job in a new occupation may not be deducted. If an employer or third party provides reimbursement for the expense, it may not be deducted.

Here are some expenses that may be deducted:

  1. Employment and job placement agency fees;
  2. Costs of preparing, copying and mailing résumés to prospective employers;
  3. Travel expenses, but only for trips taken primarily to seek new employment.

Job search expenses may not be deducted if there is a substantial gap or break between the last job and the time the search for a new job begins. Expenses may also not be deducted for first-time job searches. If the aformentioned job search epxenses qualify, they are claimed as a miscellaneous itemized deduction. Only the amount of total miscellaneous deductions that exceed two percent of a taxpayer’s adjusted gross income may be deducted on Form 1040, Schedule A.

Depending  on the level of a taxpayer’s income, losing a job may qualify a taxpayer for some additional tax breaks, such as:

  • Child Tax Credit. A tax credit of up to $1,000 for qualifying children under the age of 17.
  • Child and Dependent Care Credit. Amounts paid to provide care for a child while working or seeking work may be deductible, depending on income level.
  • Earned Income Tax Credit. The more children, the higher the credit.
  • Saver’s Credit. The amount of the credit is 50%, 20% or 10% of retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly), depending on the amount of adjusted gross income reported on a Form 1040 or 1040A.

If you have a question about any possible deduction related to the search for a new job, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.How Your Job Hunt Could Lower Your Taxes

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