Tax Tip: Deductions and credits may help job seekers rejoin workforce
The first unemployment report since Labor Day indicates that 9.6 million Americans are looking for work. Seeking employment has its hardships, but certain tax benefits may help jobseekers as they transition from one job to another or from unemployment to the workforce.
Jobseekers should evaluate if they can claim any of these three tax benefits:
1. Job Search Expenses
Besides the actual time investment that goes into a job search, the monetary costs can add up. Luckily, job search costs can be tax deductible for some taxpayers. Deductible expenses can include resumé development, professional placement services and unreimbursed mileage. The job search must be in the taxpayer’s current line of work.
2. 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 c 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.
3. Child Care Expenses
Parents who work or are seeking work and pay care expenses for children under 13 may be eligible for the Child Care Credit. They may claim up to $1,050 for one child and $2,100 for two or more children.
Once a taxpayer lands a new job, they may qualify for additional tax deductions, including:
1. Relocation Expenses for a New Job
Between the ages of 18 and 46, baby boomers held an average of 11.3 jobs. Changing jobs doesn’t always mean moving, but when it does, some relocation expenses may be tax deductible. Deductions for the costs of moving self, family and belongings are above the line, meaning taxpayers don’t have to itemize to claim them.
2. Job Expenses
Expenses for unreimbursed items necessary for working may be eligible tax deductions. This includes items such as computers, work tools, mandatory training, required uniforms and union dues. To qualify as tax deductions, these expenses must be ordinary and necessary for the employee’s job and ineligible for reimbursement.
These deductions and credits may ease the burden a job search and could even make accepting a job in a new town or with higher out-of-pocket costs possible. Knowing what tax tools are at their disposal can help job seekers navigate unemployment and rejoin the workforce.
The earned income tax credit is one of the nation’s largest anti-poverty programs and an important piece of annual income for millions of Americans.
Adoptive families may also take advantage of the federal adoption tax credit which is worth up to $13,570 (for 2017) for each child they adopt.
20 percent of eligible taxpayers do not claim the Earned Income Tax Credit due to the misunderstanding of the requirements which can be proven costly.
Education tax benefits for students and their parents can save both money