Job search, work expenses underutilized for tax deductions
With tax day quickly approaching on April 17, a new survey by CareerBuilder and Liberty Tax Service has revealed that many job seekers may be missing out on tax deductions related to either their job search or work expenses.
According to the survey, only 20 percent reported to have claimed work-related expenses on their taxes, with just 7 percent claiming job-search expenses.
Job seekers may hesitate when claiming such expenditures, because they can’t clearly identify what’s eligible. That’s why it’s important to consult a tax professional to understand what items you could be deducting.
Eligible job-search expenses
At least three-out-of-four workers surveyed weren’t aware that you may be able to claim professional résumé-writing services and résumé paper. While more than half didn’t know travel to and from job interviews may be claimed, the majority of workers were aware that costs associated with relocating for a job may be tax deductible.
Number of workers who didn’t know you could potentially claim the following job-search expenses:
- Professional résumé-writing service – 78 percent
- Résumé paper – 84 percent
- Travel (parking, tolls) to and from job interviews – 57 percent
- Relocation to another city or state for a job (moving trucks, travel, temporary housing, etc.) – 38 percent
“Documenting the costs of a job search may deliver a tax break whether it results in a new position or not. Job-search expenses may be deductible when, totaled with employee expenses and other miscellaneous deductions, they exceed 2 percent of adjusted gross income,” says John Hewitt, CEO of Liberty Tax Service.
Eligible work expenses
Workers were across the board in terms of understanding which items were and weren’t tax deductible.
Number of workers who didn’t know you may be able to claim the following work expenses:
- Uniforms – 37 percent
- Steel-toe boots for work – 42 percent
- Safety glasses for work – 44 percent
- Travel to see clients – 50 percent
- Travel to work at different locations – 53 percent
- Home office equipment – 38 percent
- Home office phone/Internet services – 40 percent
- Home office furniture – 59 percent
“Home office expenses may be claimed if you exclusively and regularly use your home office as your principal place of business and/or meet other requirements. It’s important to be aware of the criteria for any eligible work-related expense, so you can appropriately maximize your return,” Hewitt says.
Eligible education expenses
Continuing education is another area in which workers often overlook potential tax deductions. Only 23 percent said that they claimed their education expenses on their tax return, while 55 percent were not aware that going back to school for new skills in their current occupation may be tax deductible.
As more and more individuals continue their education to supplement their skill base, it’s good to know what relevant tax breaks there may be. Again, consult with a tax professional or with someone from your educational institution’s financial aid office to understand the full tax implications of your education.
“With so many workers transitioning to faster-growing industries post-recession, we see greater investments in acquiring new degrees and certifications,” says Rosemary Haefner, vice president of human resources at CareerBuilder. “If you’re not researching which educational or career-related expenses are tax deductible, you could be leaving money on the table.”
What are we doing with our tax returns?
Good news – it seems most people are spending their tax returns wisely or saving it. Forty-one percent of those surveyed said that they plan to pay off their bills, and 34 percent said they were going to put their return into a savings account. Here’s what other people were planning to do:
- Make home improvements – 11 percent
- Go on vacation – 9 percent
- Invest it – 7 percent
- Pay back money they owe to people – 5 percent
The national study, conducted by Harris Interactive from February 9 to March 2, 2012, included 6,000 workers across industries and company sizes.