Job Search Expenses Can be Tax Deductible

Taxpayers who are looking for a new job that is in the same line of work may be able to deduct some job-hunting expenses on their federal income tax return, even if they don’t get a new job.
Here are some important facts to know about deducting costs related to job searches:

1. Same Occupation. Expenses are tax deductible when the job search is in a taxpayer’s current line of work. 
2. Résumé Costs. Costs associated in preparing and mailing a résumé are tax deductible.
3. Travel Expenses. Travel costs to look for a new job are deductible. Expenses including transportation, meals and lodging are deductible if the trip is mainly to look for a new job. Some costs are still deductible even if looking for a job is not the main purpose of the trip.
4. Placement Agency. Job placement or employment agency fees are deductible.
5. Reimbursed Costs. If an employer or other party reimburses search related expenses, like agency fees, they are not deductible.
6. Schedule A. Report job search expenses on Schedule A of a 1040 tax return and claim them as miscellaneous deductions. The total miscellaneous deductions cannot be more than two percent of adjusted gross income.

Taxpayers can’t deduct these expenses if they:

• Are looking for a job in a new occupation,
• Had a substantial break between the ending of their last job and looking for a new one, or
• Are looking for a job for the first time

Source: Internal Revenue Service

contact@officetaxservices.com

(858)247-1680

 

Record Keeping

If you have a business, keeping track of income and expenses is part of the job.
Be sure to keep:

• Track of ALL spending;
• A copy of EVERY tax form you file;
• Separate bank accounts for business and personal purposes;
• Personal expenses separate from business expenses;
• All business records at least four years after return is filed.

contact@officetaxservices.com

(858)247-1680

 

Moving Expenses Can Be Deductible

Did you move due to a change in your job or business location? If so, you may be able to deduct your moving expenses, except for meals. Here are the top tax tips for moving expenses.
In order to deduct moving expenses, your move must meet three requirements:

1. The move must closely relate to the start of work.  Generally, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.
2. Your move must meet the distance test.  Your new main job location must be at least 50 miles farther from your old home than your previous job location. For example, if your old job was three miles from your old home, your new job must be at least 53 miles from your old home.
3. You must meet the time test.  After the move, you must work full-time at your new job for at least 39 weeks in the first year. If you’re self-employed, you must meet this test and work full-time for a total of at least 78 weeks during the first two years at your new job site. If your income tax return is due before you’ve met this test, you can still deduct moving expenses if you expect to meet it.

If you can claim this deduction, here are a few more tips from the IRS: 

• Travel.  You can deduct transportation and lodging expenses for yourself and household members while moving from your old home to your new home. You cannot deduct your travel meal costs.
• Household goods and utilities.  You can deduct the cost of packing, crating and shipping your things. You may be able to include the cost of storing and insuring these items while in transit. You can deduct the cost of connecting or disconnecting utilities.
• Nondeductible expenses.  You cannot deduct as moving expenses any part of the purchase price of your new home, the cost of selling a home or the cost of entering into or breaking a lease. 
• Reimbursed expenses.  If your employer later pays you for the cost of a move that you deducted on your tax return, you may need to include the payment as income. You report any taxable amount on your tax return in the year you get the payment.
• Address Change.  When you move, be sure to update your address with the IRS and the U.S. Post Office. To notify the IRS file Form 8822, Change of Address.

Premium Tax Credit – Changes in Circumstances. 
If you or anyone in your family purchased health coverage through the Marketplace and had advance payments of the premium tax credit paid in advance to your insurance company to lower your monthly premiums, it is important to report life changes to the Marketplace when they happen. Moving to a new address is one change you should report. Other things to report include changes in your income, employment, family size, and gaining or losing eligibility for other coverage. Reporting life changes as they happen allows the Marketplace to adjust your advance credit payments. This will help you avoid a smaller refund or unexpectedly owing taxes when you file your tax return.

Source: Internal Revenue Service

contact@officetaxservices.com

(858)247-1680

 

Do you plan to donate your time to charity this summer?

If you travel for charity, you may be able to lower your taxes. Here are some tax tips that you should know about deducting charity-related travel expenses:

• Qualified Charities.  To deduct your costs, you must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. 
• Out-of-Pocket Expenses.  You may be able to deduct some of your costs including travel. They must be necessary while you are away from home. All  costs must be:
• Unreimbursed, 
• Directly connected with the services, 
• Expenses you had only because of the services you gave, and 
• Not personal, living or family expenses.

• Genuine and Substantial Duty.  Your charity work has to be real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
• Value of Time or Service.  You can’t deduct the value of your time or services that you give to charity. This includes income lost while you serve as an unpaid volunteer for a qualified charity.
• Travel You Can Deduct.  The types of expenses that you may be able to deduct include:
• Air, rail and bus transportation, 
• Car expenses, 
• Lodging costs, 
• Cost of meals, and
• Taxi or other transportation costs between the airport or station and your hotel.
• Travel You Can’t Deduct.  Some types of travel do not qualify for a tax deduction. For example, you can’t deduct your costs if a significant part of the trip involves recreation or  vacation.

 Source:Internal Revenue Service

contact@officetaxservices.com

(858)247-1680