For those of you who spent time during 2011 looking for a new job, the next few days as the year comes to a close, you may have tax issues to deal with that you’ve never had before. I asked a couple experts what information and expenses job seekers should be keeping track of, and what can you do between now and New Year’s which will benefit you come tax time in April. Here’s what they shared:
Tim Gagnon, a finance professor at Northeastern University, advises to keep track of these job search expenses:
- Car mileage and other travel expenses to and from job interviews and career fairs, such as subway, train, or plane fare (see IRS Publication 463 for current information regarding mileage rates and car expenses.);
- Resume expenses such as professional printing and/or home computer supplies like paper and ink, postage, listing fees for websites, and advice or resume-writing services;
- Career coach expenses;
- Money spent on coffee or a meal with a potential employer or for an informational interview;
- Long distance telephone expenses.
Andrew Schrage of MoneyCrashers.com had this to add:
If you can squeeze any of these expenses or events in before December 31, try to do so, as it will allow you to deduct those expenses for 2011. Also, remember that these deductions are allowed even if you don’t land employment. Many expenses can only be deducted if the total amount exceeds 2% of your income for the year. Consult IRS Publication 529 for full details.
Employment agency fees are deductible, but if they are eventually paid back to you by the employer, it must be reported as income.
Lastly, there are a few exclusions when it comes to the deductions you can take. For example, if you are looking for a job in a new occupation, if you’re looking for a job for the first time, or if there was a significant time lapse between the end of your last job and the start of your job hunt, then you likely will not be able to deduct these expenses.
Ultimately, it is well worth your time to track and organize these expenses. The last thing you want is problems with the IRS, so make sure that you have receipts and invoices to back up all deductions. In order to streamline your tax filing process, start locating and gathering these receipts now, even using a smartphone app like Shoeboxed. This strategy will also save you time as you submit your return.
On a final note, keep in mind that any unemployment compensation received throughout the year must be reported as income, along with any severance pay you received or 401k distributions you took. Again, consult the IRS website for full details.
If you’re part of the US unemployment rate statistic and actively searching for a job, make sure you take advantage of the deductions that are rightfully yours..and if your search continues into 2012, start the year off right by tracking your expenses so you won’t be stressing over this important tax chore a year from now.
About this Examiner: Kathryn Marion is the award-winning author of GRADS: TAKE CHARGE of Your First Year After College!, the most comprehensive resource for navigating the world of work and independent living after graduation, as well as host of the book’s companion resource site, www.GradsTakeCharge.com. The print edition of GRADS: TAKE CHARGE is available through Amazon and other online booksellers. The e-book edition is available through e-junkie.
Kathryn also coaches students, graduates, and career changers as well as consults with small businesses and aspiring authors.
Follow her other Examiner columns: College to Career and Life After College. And even more articles on SelfGrowth.com.