The Internal Revenue Service (IRS) allows taxpayers to deduct certain job search expenses, including travel costs to and from interviews and the cost of a resume service. These expenses are claimed as miscellaneous itemized deductions, but they are subject to the 2% adjusted gross income (AGI) limit. If you are looking for work in your current occupation, you can deduct any job search expenses you incur. However, costs associated with searching for a new occupation are not tax-deductible.
Employers can also deduct the expenses they incur when interviewing potential employees as an ordinary and necessary business expense. It is important to note that, for many people, deducting these costs will not result in a lower tax bill because they are subject to the two percent rule. This means that you can only deduct your total miscellaneous expenses, including job search expenses, if they exceed two percent of your adjusted gross income. Previously, employees could deduct job search expenses such as traveling for interviews and printing resumes, at least to a certain extent.
If the employer pays for these expenses, the employee must recognize it as taxable income. Nowadays, many employers opt for simpler administration such as a one-time lump sum allowance.
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