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RTRP Details for Deducting Job Search Costs


It’s the little things that count when you become a tax preparer. Awareness of uncommonly known details makes building a practice in the income tax field easier than many other professions.

There’s one example that is certain to occur in the present economic circumstances of high unemployment. That is, a lot of taxpayers can deduct some of their job search expenses on their tax returns. And, they don’t have to be unemployed to qualify for the tax deduction.

Costs to update a resume or attend career fairs are normally tax-deductible expenditures. The training for tax preparer jobs covers the requirements for obtaining the tax deduction. Many taxpayers miss taking this deduction by lacking the knowledge of a Registered Tax Return Preparer. Tax software used for self-preparation doesn’t always help capture deduction of job search expenses.

You enhance the growth of your tax practice when identifying overlooked deductions. That’s how you add value to the taxpayer community. Preparation for the tax preparer exam gets you started on this valued social contribution.

When asking about job search costs for tax deductions, you’ll want to assure that these expenditures by taxpayers relate to looking for work in their current professions. Costs to find a job in a new occupation are not tax-deductible. In addition, workers are only allowed to deduct job search costs incurred during a continuous career. A substantial break between an immediately preceding job and a new one disallows deduction of the job search costs.

First-time job seekers are not permitted to deduct job search costs. So, the new college graduates are out of luck on this tax benefit. That’s usually okay because deduction of job search costs only benefits taxpayers with enough overall tax deductions to itemize. Job search costs are a miscellaneous itemized deduction. They are limited to only the amount by which they exceed two percent of a taxpayer’s adjusted gross income.

Job search costs can add up to a substantial amount, particularly when travel is involved. When the primary purpose of a trip is to look for a new job, the travel expenditures are deductible as job search costs. Fees paid to an employment or outplacement agency for eventually locating a new job are also tax-deductible. But, taxpayers can deduct job search costs even when they don’t result in finding a new position.

The nuances about deducting expenditures such as job search costs are easy for a RTRP to learn. But you should remember that most taxpayers need your help on these matters. Despite the simplicity of such subjects for tax professionals, the general public doesn’t stay fully informed about them.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

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