Gregory S. DuPont
Saturday’s Child Must Work for a Living
There are many tax deductions available to those in today’s workforce. Consider this: Do you have a fax machine at home to provide your customers with better access to you? Did you spend money out of your pocket in moving to a new location for a new job? Have you taken classes pertaining to your field in order to better your skills? If you answered “yes,” to any of these questions you may be eligible for some deductions.
Keep in mind, the Internal Revenue Service (IRS) rules addressing job-related expenses are subject to interpretation. As a result, the IRS is fairly inflexible concerning what is and what isn’t deductible.
However, it’s worth a consultation with your tax professional to determine if you are eligible for any of the following deductions.
On the Hunt
If you’ve been actively job hunting, here are five tax deductions worth looking into:
- typing, printing, and mailing your resumes
- placing want ads
- travel, meals, and entertainment when away from home on a job hunt
- telephone calls
- career counseling, job placement, and employment agency fees
These five deductions only apply if you are trying to find a new job in the same line of work. They don’t apply if you are changing careers or searching for your first job.
On the Job
If you are currently employed, and you take courses to improve the skills used in your job, the cost of those courses may be deductible if the following pertains to your situation:
o You are employed or self-employed.
o You’ve already met the minimum educational requirement of your job.
o Your employer (or state law) requires you to take the course.
o The course does not qualify you for a new line of employment.
o The course helps you maintain or improve your job skills.
Again, the IRS is inflexible in its interpretation of these guidelines. You must be able to prove the course was beneficial or necessary to maintaining or improving your job skills. Once you have established proof and are eligible, these three additional deductions may be possible: 1) local transportation to the course; 2) books and tuition; and 3) travel and expenses while away from home—this applies if you must travel to a location to do research that can only be completed there. You may also take a deduction if you take a course in another country or away from your home, even if the course is available near you.
Even though your job may require you to incur some expenses, not everything is deductible. Following are some deductions that may apply:
o union dues
o uniforms and special clothing
o computers and phones
o medical exams to prove your fitness
o professional and trade-association dues
o unreimbursed travel
o books, subscriptions, and periodicals
Some of these, such as computer and phone deductions, may be difficult to obtain since you must prove you need the equipment for your job and that it is not provided by your employer.
Tax deductions applying to job-related moving expenses are fairly concrete. There are two mathematical criterions you must meet for eligibility.
1st criterion—The distance between the location of your new job and your former residence must be at least fifty miles more than the distance between your former residence and your former job location. To clarify, follow this formula:
[A] The distance between your former residence and new job location_______
[B] The distance between your former residence and former job
[C] Subtract B from A_______
If [C] is more than 50 miles, you may be eligible. However, there is also the second criterion to be met.
2nd criterion—You must be employed full-time at your new job location for at least 39 weeks during the one-year period immediately after your arrival.
For those who are self-employed, the rule is even stricter. To qualify for the deduction, you must work in the same new job for 78 weeks during the two years after your arrival.
Deductions for moving expenses, as they relate to a new job, have been dramatically cut with the enactment of the new Tax Bill in 1993. As of January 1, 1993, you may deduct only the cost of moving your possessions from your former home to your new home. However, you may also be able to deduct your own travel costs incurred in the move, along with lodging (meals not included).
A consultation with your tax professional can help you learn what particular deductions may be available and beneficial to you.