Bankrate's 2009 Tax Guide
Work
taxes
Writing off job-hunting costs

What counts

Now to the important question: What can you write off?

Just about anything counts as a job search expense, starting with your resume. You can deduct amounts you spend for preparing the document, including fees for professional help in tweaking it to catch an employer's eye. Once it's ready to go, be sure to note the delivery costs; they're deductible, too.

If you get help beyond shaping your resume or curriculum vitae, that's also deductible. This includes employment and outplacement agency fees that help you look for a new job in your present field. Be careful here, however. If your new employer later pays you back for those employment agency fees, you might need to include at least some of that repayment money in your gross income. Essentially, the IRS doesn't want you to get a free deduction based on money that you then, in tax terms, recovered.

Also keep track of the cost of advertising your services, newspapers and other periodicals you purchased to monitor their help-wanted ads and legal fees paid to an attorney to review an employment contract.

Some travel expenses incurred in your employment search also can be deducted. This includes some food expenses, as well as lodging and, in some instances, transportation to and from another city to look for a job.

Keep in mind that the trip must primarily be to look for a new job. You can't go visit your cousin in Kansas City, drop off a resume at ABC Corporation, and then deduct your transportation costs. Some personal time, however, is allowed. Just make sure that the amount of time you spend on personal activity is substantially less than the time you spend looking for work.

No matter what you eventually choose to deduct, it will all be disallowed unless you can show receipts (not just a monthly credit card statement) for your expenses, including a mileage log for the car with start/finish odometer readings, date, and purpose of the trip.

Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job while in the area. This could be, for example, the cost of a rental car or cab fare to go from the hotel (or your cousin's house) to meet with ABC Corporation's personnel department.

If you use your own car to make job search trips, either out of town or within your current city, keep track of the odometer readings. You can use the standard mileage rate to figure your car expenses. This per-mile rate varies each year, and sometimes within a year, depending on, in large part, current gasoline prices. Check www.IRS.gov for the latest rates.

Have you decided to strike out on your own? The costs of looking into that enterprise also can count as long as your self-employment effort is in the same field as your last job.

Remember, when you become your own boss, the same documentation guidelines apply to those deductions, too.

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