While job seekers could claim job search expenses on their 2017 income tax returns if they met certain restrictions imposed by the IRS, this is no longer an option. On December 22, 2017, Congress passed the Tax Cuts and Jobs Act, which significantly impacts 2018 tax deductions related to job search expenses.
As detailed in the 2017 IRS Publication 529, job seekers could deduct things like moving expenses if they were relocating for a job transfer, the investment of working with a resume writer or a career coach, or the cost of transportation and lodging when traveling as part of their job search. These types of job search expenses were tax deductible in 2017 only if the total expenses exceeded two percent of the job seeker's adjusted gross income and the job seeker itemized deductions on his-or-her tax return.
All of this has changed. If you are looking for a new job in 2018 and beyond, you will not be allowed to deduct job search expenses on your tax return, even if the costs exceed two percent of your adjusted gross income and you file an itemized tax return.
You may also want to consider the Tax Cuts and Jobs Act when negotiating salary on your next job. With the new tax law, employees will no longer be able to deduct unreimbursed automobile expenses.
Be aware that unemployment benefits and disability payments are taxable income.
Good news. There is a silver lining to this dark cloud. The 2018 increase in standardized deductions and the 2-3% decrease in tax rate percentages in each of the seven tax brackets will help many Americans keep more of their hard earned money.
For detailed information, read the section-by-section summary of the Tax Cuts and Jobs Act issued by the U.S. House Ways and Means Committee, and read the 2018 IRS Publication 529 when it is released.
Note: This information is not intended to provide financial, legal, or tax advice. Consult with your CPA or attorney for specific guidance.
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Austin Farmer, graphic artist, is a graduate of Savannah College of Art and Design where he majored in Industrial Design and minored in Architecture. Austin creates marketing materials for businesses and uses his artistic and musical talents to enhance the worship service at Compassion Church. He also draws exquisite portraits! Austin's favorite Scripture passage is Isaiah 12:2.