Job Search Expense Tax Deductibility: Is Uncle Sam in Tune with the Times?

by Anneli C. Olila
Principal, Olila Documents & Communication Strategies
Editor-in-Chief, Boston GreenScene

Job search expenses such as resume services, placement agency fees, and travel costs are tax-deductible–for some, and sometimes. Here are Uncle Sam’s criteria:

• You have to be looking for a job in your current occupation
• Any travel you itemize has to be primarily related to looking for a job
• You can’t be looking for your first job
• There can’t have been a ‘substantial break’ between the end of your last job and when you started looking for a new job.

For those fitting these criteria, the deductibility of job search expenses will offer some small relief and help offset unavoidable costs in a tight and competitive labor market. But, what about those who do not fit the criteria? Some exclusions make sense, of course.  Why, for example,  would Uncle Sam reimburse you for your vacation to Hawaii or, in the case of the first-time job seeker, allow you to deduct from taxes you haven’t yet paid? In these greening times, however, and in a world in which career outlooks change as rapidly as technology, does it make sense to restrict allowable deductions to non-career changers? Is ‘career change’ even a definable parameter? The Bureau of Labor Statistics (BLS) doesn’t think so:

“The Bureau of Labor Statistics (BLS) never has attempted to estimate the number of times people change careers in the course of their working lives. The reason we have not produced such estimates is that no consensus has emerged on what constitutes a career change. A few examples may help to illustrate the difficulty of defining careers and career changes. Take the case of a BLS economist who is promoted to a management position. Before the promotion, she spent most of her time conducting economic research. After the promotion to the management position, she still may conduct research, but she also spends much more time supervising staff and reviewing their research, managing her program’s finances, and attending to a variety of other management tasks. This promotion represents an occupational change from economist to manager, but does it also represent a career change? It depends on how you define a career change.”

“Did a construction worker who decided to start his own home-remodeling business experience a career change? What about a newspaper reporter who became a TV news anchor? Each of these examples involves a change in occupation, industry, or both, but do they represent career changes? Most people probably would agree that a medical doctor who quits to become a comedian experienced a career change, but most “career changes” probably are not so dramatic.”

“What about the case of a web site designer who was laid off from a job, worked for six months for a lawn-care service, and then found a new job as a web site designer? Might that example constitute two career changes? If not, why not? Is spending six months at the lawn-care service long enough to consider that a career? How long must one stay in a particular line of work before it can be called a career?”

“Until a consensus emerges among economists, sociologists, career-guidance professionals, and other labor market observers about the appropriate criteria that should be used for defining careers and career changes, BLS and other statistical organizations will not be able to produce estimates on the number of times people change careers in their lives.” (Source: http://www.bls.gov/NLS/nlsfaqs.htm#anch43)

The BLS also found that, on average, Americans hold 10.8 jobs between the ages of 18 to 42. How realistic is it, then, to restrict tax deductions to those staying in their current occupation? What if their occupation is dying or in a dying industry–a situation many Americans are facing today?

If we need to nurture new industries (the growing green industry being just one), if the current economic climate demands greater resourcefulness among those looking for work, and if technological and social evolutions are changing the very landscape of the work world, it might be time for Uncle Sam to update his criteria!

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