With tax season approaching, it's time to take a close look at what's deductible, and what's not, especially if you have been hunting for a job. Unemployment doesn't necessarily mean you're exempt from filing income tax returns. The good news is, your job search may be tax-deductible.
Spike Horvatic used to do golf course maintenance in Naples.
"I've been looking for work for about a year," Horvatic said.
While he's applied for just about every job under the sun, his heart is still on the 18th hole. "I've done everything from go on the internet, Job Builders or Career Builders, Craigslist, just walking up to every business I could to hand them a resume," Horvatic said.
A relief for horvatic and the millions of americans on the job-hunt: the cost of printing and mailing those resumes is tax-deductible. So is travel for job interviews. According to Joe Cloos of Liberty Tax Service, that's only if you're looking for a job in the same field.
"Any continued education classes are deductible too, within limits," Cloos said. "If you are going through college, you can deduct your tuition and books and lab fees."
Also deductible are employment agency fees and moving costs if your new job is takes you more than 50 miles from your old home. If you keep a log of job calls, your phone bill might be too. But it's important to know what isn't.
"Cothing is not necessarily something you would be able to deduct because even if you bought a suit for an interview, you can still wear that suit either for church or to social," Cloos said.
The cost of that pre-interview haircut is also on you. And if you're a first-time job seeker, just getting out of school, nothing is deductible.
"There's a lot of things people assume they can do and it just isn't there," Cloos said.
According to a survey done by CompleteTax, about 40% of adults don't realize unemployment benefits are taxable. Last year, the first $2,400 was tax-free, but this year, it's all taxed.
If you're unsure what's deductible and what isn't, these could help:
LibertyTax.com - Liberty Tax Service offers free consultations
CompleteTax.com - CompleteTax's Premium federal program is free to anyone who claimed unemployment benefits in 2010
Freefile.irs.gov - Tax prep and e-filing to taxpayers with adjusted gross income of $58,000 or less in 2010