As the beginning of each year approaches, many scramble to come up with deductions to make April's tax bill more palatable—or tip the scales in favor of a refund. In addition to the normal accounting expenses, don't forget to look at money spent job hunting. CPAs can help some clients save on tax bills—and accounting professionals may be able to reduce their own burden—but there are some qualifications to meet before you can write off job search expenses.
Expenses related to job hunting may be one of the most overlooked tax deductions. Professional accountants searching for work in the financial niche can write off some expenses—one qualifier for the deduction is that work is being sought in the same occupation as the previous job. Certified public accountants can write off accounting expenses for clients who switched jobs within any industry. Accounting expenses that can be deducted include costs associated with food and lodging, cab fare, transportation expenses—including a per-mile deduction when driving a personal vehicle—employment agency fees, printing business cards or resumes, and postage.
Travel must be related primarily to your job search to qualify as deductible accounting expenses for tax purposes. A trip to visit relatives in a neighboring state can't be completely written off because a few job applications were completed during the stay. However, if the sole purpose of leaving the relative's home on any given day was to search for a job in the area, then the mileage for that day might be deductible.
Not every job search qualifies a person for deductions, though. If there is a substantial amount of time between your last job and your current search, expenses don't qualify. Someone searching for a first job in a career does not qualify for deductible expenses either, but you can qualify for moving expenses if a first job is fifty miles or more from your current home.
For accounting expenses related to a job search to be deductible, the total of those expenses must meet IRS thresholds. The expenses are entered as miscellaneous itemized deductions on the Schedule A form. Amounts exceeding 2 percent of the adjusted gross income on the tax return are deductible. Make sure all expenses used to meet the threshold are backed up receipts and mileage logs. In the event of an audit, you or your client could lose the deductions without the right level of proof.
As with all tax-related accounting expenses, details and accuracy are important when writing off job-related costs. CPAs should speak with clients in detail to ensure expenses match IRS requirements. Whether you're helping a client or completing your own return, don't forget to check IRS rules—things like thresholds and mileage allowances may have changed.
(Photo courtesy of freedigitalphotos.net)