Recruiting in China

The tax man is on your side when you're job hunting. Search expenses are deductible as long as you are looking for a new position in your current field -- even if you're still working.

Job hunters may be eligible for can take the following deductions, says Jackie Perlman, a senior tax-research analyst at H&R Block, in Kansas City, Mo.:

travel expenses

employment-agency fees

resume-preparation fees

career-counseling expenses

the cost of advertising your services

newspapers and other periodicals purchased for their help-wanted ads and

legal fees paid to an attorney to review an employment contract.

To take advantage of these deductions, you need to itemize, rather than take the standard deduction. Job-hunting expenses are reported as miscellaneous itemized deductions on line 20 of Schedule A. And you can only take them if the total of your miscellaneous deductions exceed 2% of your adjusted gross income. In other words, taxpayers with adjusted gross incomes of $50,000 can deduct miscellaneous expenses exceeding $1,000 (2% of $50,000). This applies whether you file as a single or file jointly with your spouse. If such a taxpayer spent $1,500 to land a job last year, he or she could deduct $500.

It's important to keep good records. For instance, by scrupulous tracking the time you spend online to job hunt, you can deduct that percentage of your online hook-up and Internet access fees. Ditto for your home phone or cellular phone. Whatever percentage you use for job hunting can be deducted from your monthly bills.

Travel Expenses

Unreimbursed travel costs to meet with employers are among the most costly job-search expenses. In many cases, these are deductible, but "travel is the thorniest point of contention" with the Internal Revenue Service (IRS), says Ms. Perlman. That's because the IRS allows taxpayers to deduct the cost to travel to interviews only if the main purpose of the trip is to meet with an employer and secure a job.

In other words, if you fly to Boston to interview with one or two companies, stay overnight in a hotel, have breakfast with a recruiter in the morning and then fly home, all the costs associated with your trip are deductible. That includes airfare, the hotel bill and 50% of the cost of your meals.

However, if you visit Hawaii on vacation, decide you want to live in Honolulu and arrange a job interview while there, you can't deduct those expenses because the main purpose of the trip is vacationing. It's possible you could deduct the cost of using a rental car to travel to the actual interview if the rental was strictly for the purpose of getting to the interview, but you can't write off the flight or your meals, according to Ms. Perlman.

What Else Doesn't Qualify?

New clothes to wear to interviews aren't deductible. Nor are your dry-cleaning bills between interviews. The IRS allows taxpayers to deduct only the cost of work uniforms that aren't suitable for any other purpose. Other items that have to be worn as a condition of employment also are legitimate expenses.

If you've had a substantial break between your last job and your current job search, job-hunting expenses cannot be deducted. This is because the I.R.S. considers them as a business expense, and if you've been out of work for a long time, you're technically not in business at the moment, says Martin Nissenbaum, national director of income tax planning at Ernst & Young in New York. Alas, the Internal Revenue Service doesn't provide clear guidance on the length of time that you'd have to be unemployed before you aren't allowed to take these deductions, he says.

About to graduate? Most first-time job-hunting expenses aren't deductible. However, if you secured an internship and then sought a full-time position in the same field, expenses related to your search are deductible, says Mr. Nissenbaum. Again, you would have to itemize expenses on your tax returns and only those job-search costs exceeding 2% of your adjusted gross income would qualify.

Moving Expenses

Job hunters who move because of a new job can deduct moving expenses that they pay out of their pockets. To qualify for this deduction, your new job must be at least 50 miles farther from your home than your old job was. If your old job was three miles from your home, your new job must be at least 53 miles from your home. You also must work at the new location for at least 39 weeks during the 12 months after you move to get the deduction.

The good news is that there's no cap on moving deductions. Moving expenses are reported on line 29 of Form 1040.

Trips back and forth to scout out a new area cannot be itemized, however, Ms. Perlman says. So any trips to a new location to look for a home or open a bank account aren't deductible. Review IRS Publication 521 -- Moving Expenses -- for more detail.

Corrections & Amplifications:
Moving costs can be taken as tax deductions whether or not a job seeker itemizes; they are reported on line 29 of Form 1040. In an earlier version of this story, moving costs had been listed among job-hunting expenses that could be deducted only if a filer itemized.

-- Ms. Byrnes is a free-lance writer in Wayne, N.J.