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Job search expenses could help reduce your tax bill

The good news is that 169,000+/- folks found jobs in August, according to the latest Bureau of Labor Statistics data.

Job-search-classified-ads-magnifying-glassThose workers help push last month's unemployment rate down to 7.3 percent, a smidge lower than the 7.4 percent out-of-work rate in July. In August 2012, the unemployment rate was 8.1 percent.

The not so good news is that another reason the unemployment rate dropped at all last month is because 312,000+/- people stopped looking for work.

If, however, you did start or continued your job search, your efforts might be tax deductible on your next federal return.

As this week's Weekly Tax Tip notes, job hunting costs could help cut your tax bill.

Job-search deduction rules: Of course, there are some requirements, three to be specific.

First, you can't claim the standard deduction. You must itemize.

Second, as part of your itemized deductions, your allowable job search costs are counted as miscellaneous deductions on your Schedule A. This means that your job hunting expenses and all other allowable miscellaneous expenditures must be more than 2 percent of your adjusted gross income.

Third, Uncle Sam won't subsidize your career change. You must be looking for a job in the same field as the one you have or most recently held. And if you're just out of school and trying to find your first job, sorry. Your efforts are tax deductible.

Deductible expenses: So if you're looking for a job and you meet these hang onto your job search receipts.

Among the costs you may count are employment and job placement agency fees, résumé preparation and mailing to prospective employers and travel, both locally and long-distance, in search of a new job.

You can find more on job search expenses and other miscellaneous deductions in IRS Publication 529.

Here's hoping your successful search will reduce not only your tax bill, but also future unemployment reports.

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