J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

19.7 Expenses of Looking for a New Job

Subject to the 2% AGI floor, you may deduct expenses of looking for a new job in the same line of work, whether or not a new job is found. If you are unemployed when seeking a new job, and the period of unemployment has been substantial, the IRS may disallow the deduction.

EXAMPLE

The IRS disallowed the driving expenses of an unemployed secretary on the ground that she was not currently employed. The Tax Court disagreed and held that for purposes of deducting job-hunting expenses, she could still be considered in the business of being a secretary. She had worked as an administrative secretary with Toyota in San Francisco. The firm relocated, resulting in a 100-mile-per-day commute. She quit her job at the end of January 1984. From February to November 1984, she drove her Cadillac El Dorado over 4,600 miles looking for a new job. The Tax Court allowed her a depreciation deduction of $2,880 and $981 for car operating costs.

Expenses of seeking your first job are not deductible, even if a job is obtained. Also, expenses of looking for a job in a different line of work are not deductible, even if you get the job.

The IRS may also dispute the deduction of search expenses of a previously employed professional who forms a partnership.

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Caution

First Job

You may not deduct the expenses of seeking your first job.

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