Job seekers: tax deductions and credits to keep in mind

December 17, 2020 : H&R Block

Stats about staggering unemployment seem to be never ending these days. If you’re one of the millions of job seekers out there, you’re probably trying to figure out what’s next. 

As you transition from one job to another or from unemployment to the workforce, we want to help you identify tax benefits that may help you reduce your tax bill.

Have other tax-related unemployment questions? Be sure to check out our Unemployment Resource Center with helpful articles and information.

Before covering your options for tax benefits, you’ll want to know that a previous tax rule that let you take a job search tax deduction has changed. After 2017’s tax reform, you can no longer deduct job search expenses. Previously, this deduction let you write off costs such as resumé development, professional placement services, and unreimbursed mileage. 

While the job search tax deduction is currently suspended, there may be other tax deductions and tax credits for you to consider during your transition:

Education expenses to improve job skills

One way to stay competitive in the job market is to take advantage of continuing education opportunities. Eligible adults in the first four years of college may claim the American Opportunity Credit of up to $2,500.

Or, those seeking to improve job skills or get a master’s degree may claim the Lifetime Learning Credit up to $2,000. Finally, those repaying student loans can take a deduction for up to $2,500 in interest paid on those loans.

Find out more about tax deductible college expenses.

Child Care Expenses

If you’re a parent who is seeking work and are paying care expenses for children under 13, you  may be eligible for the Child Care Credit. This nonrefundable credit would allow you to claim up to $3,000 of expenses for one qualifying child and $6,000 for two or more qualifying children.

Expenses from a side job

Many job seekers have chosen to do freelance or independent contract work while looking for their next opportunity. Because gig workers can often set their own hours, you can continue to earn income, but still explore and interview for other positions when you need to.

If you’ve taken on a side job, you’ll want to know about certain tax deductions and filing considerations for independent contractors.

Getting help with tax deductions and tax credits as a job seeker

These deductions and credits may ease the burden of a job search. Knowing what tax tools are at your disposal can help you navigate unemployment and rejoin the workforce.

You may also find that there are other deductions and credits available to you based on your personal situation. Whether you file using H&R Block Online or if you leave it all to a tax pro, you can rest assured that we’re here to help you get your max refund. 

Related Resources

Claim missed stimulus money from life changes with 2020 tax credit

Learn more about how the recovery rebate credit works and who may be eligible to claim additional stimulus money at tax time.

Don’t be surprised at tax time: unemployment benefits have tax implications

Get tax advice about unemployment benefits and how they may affect you when it comes time to file your 2020 taxes. Read more.

H&R Block

H&R Block

Connect with us