MYTH :
You Can Deduct the Cost of Job Hunting
REALITY :
You can only deduct job hunting expenses if you’re looking for a new job in your current occupation and meet specific criteria.
HOW WE KNOW :
IRS rules provide detailed conditions for job search expense deductions.
KEY TAKEAWAYS :
Non-Deductible: As of the Tax Cuts and Jobs Act (TCJA) of 2017, job hunting expenses are no longer deductible for tax years 2018 through 2025.
Historical Deduction: Before 2018, certain job search expenses were deductible if they met specific criteria.
Stay Informed: Understanding the current rules for job hunting expense deductions is crucial for accurate tax filings.
One common tax myth is the belief that you can deduct the cost of job hunting. This misconception can lead to incorrect tax filings and potential issues with the IRS. Here's what you need to know to stay compliant and avoid these pitfalls.
Origin of the Myth
Historical Deduction: Before the Tax Cuts and Jobs Act (TCJA) of 2017, job hunting expenses were deductible under certain conditions.
Lack of Awareness: There is often confusion about the changes in tax laws affecting the deductibility of job search expenses.
Reality of Deducting Job Hunting Costs
Current Law: The TCJA suspended the deduction for job hunting expenses for tax years 2018 through 2025. During this period, job search expenses are not deductible.
Previous Conditions: Prior to 2018, job hunting expenses were deductible if they were incurred while searching for a job in the same field. This included costs for resume preparation, travel expenses for interviews, and employment agency fees.
IRS Guidelines on Job Hunting Expenses
Pre-TCJA Rules: Before 2018, job hunting expenses could be deducted as miscellaneous itemized deductions subject to the 2% adjusted gross income (AGI) floor.
Current Rules: Under the TCJA, job hunting expenses are not deductible for the tax years 2018 through 2025.
Why the Myth Persists
General Misconceptions: Many taxpayers are unaware of the changes brought by the TCJA and believe that job hunting expenses are still deductible.
Anecdotal Advice: Misleading information and anecdotal advice from non-professional sources perpetuate the myth.
Avoiding the Pitfall
Understand the Current Law: Clearly understand that job hunting expenses are not deductible under the current tax law for the years 2018 through 2025.
Stay Updated: Keep informed about any changes in tax laws that may affect the deductibility of job hunting expenses in the future.
What You Need to Do
Accurate Reporting: Ensure that you do not attempt to deduct job hunting expenses on your federal tax return for the years affected by the TCJA.
Plan Financially: Be aware that job hunting expenses will not provide tax relief and plan your finances accordingly.
Consulting a Tax Professional
Seek Professional Advice: Consulting a tax professional can ensure you understand current tax laws and avoid attempting to claim non-deductible expenses.
Stay Updated: A professional can help you stay informed about any future changes to the tax code that might reinstate the deduction for job hunting expenses.
