Bad news for job seekers counting on the job search tax deductions they took advantage of in previous years.
Job Search Tax Deductions Vanish with 2018 Returns
When Congress passed the Tax Cuts and Jobs Acts in December 2017, provisions taking effect in 2018 suspended many tax deductions through 2025 within the “Miscellaneous Deductions” category, which includes job search-related expenses.
Things like moving expenses when relocating for a new job and other job search deductions noted below for 2017 are no longer available or have changed.
IRS Publication 529 outlines the miscellaneous itemized deductions subject to the 2% Adjusted Gross Income (AGI) Limit for 2018.
Not surprisingly, the publication is complex and confusing. Check with your accountant or tax professional for how to deal with the changes starting in 2018.
Which Executive Job Search Expenses Were Deductible in 2017?
Résumé Costs. You could deduct the cost of preparing and mailing your résumé.
Travel Expenses. If you traveled to look for a new job, you might have been able to deduct the cost of the trip. The trip had to mainly be about looking for a new job.
Specifically, the IRS stated:
“You may deduct travel expenses, including meals and lodging you incurred in looking for a new job in your present trade or business. You may not deduct these expenses if you had them while looking for work in a new trade or business or while looking for work for the first time.
If you’re unemployed and there’s a substantial break between the time of your past work and your looking for new work, you may not deduct these expenses, even if the new work is in the same trade or business as your previous work. Refer to Publication 529, Miscellaneous Deductions.”
Placement Agency. Job placement or employment agency fees were deductible.
Reimbursed Costs. If an employer or other party reimbursed search related expenses, like agency fees, they were not deductible.
But, job seekers couldn’t deduct the above 2017 expenses if they . . .
- Were looking for a job in a new occupation,
- Had a substantial break between the ending of their last job and looking for a new one, or
- Were looking for a job for the first time.