If I paid money to an employment agency will I get that money back on my taxes?

Answer 1

Expenses of looking for work do not generate a refund. Even if you itemize (use Schedule A) and take a larger deduction than the standard deduction, you will not recover the costs of the employment agency.

Unreimbursed expenses related to your job, or looking for a job, are limited to the excess of 2% of your income, so it would be unusual to your jobseeking expenses to benefit you at all.

Answer is no.

Answer 2

I will assume that you are the employee who paid the agency and not the employer paying the agency.

If you are the employee, you can deduct the amount off of your taxable income. This is not the same as getting that money back. It just means that you can reduce your total income and not pay tax on it.

So, if you made $20,000 and your total tax is 10% ($2,000) and you paid the agency $500, you are not going to reduce your total tax to $1,500. Instead, the $500 gets taken from the total $20,000 and now you have to pay tax on $19,500. Since your tax rate is $10, you now have to pay $1,950. So, you "get back" $50.

In other words, you get back the tax you would have paid on the $500 if you didn't deduct it from your total income. The tax you would have paid on $500 is 10%, which is, $50.

If itemizing, which means making a deduction for specific expenses (mortgage interest, health care costs, charitable contributions, etc), gives you a bigger total deduction than taking the standard deduction, which everyone can take, than go with itemizing.

If you aren't itemizing your deductions, it won't matter because the IRS just gives a standard deduction of several thousand dollars.

This is for Federal taxes. For state and local, you'll have to consult elsewhere.

In the link, search for the following text:

Employment and outplacement agency fees

Answer 3

It is (if anything at all) an itemized deduction subject to the 2% floor. So, if your income is $40,000 the first $800 is not deductible. Anything over that is included in your itemized deductions (Schedule A). As mentioned in the previous answer, if your standard deduction is greater than your itemized deduction, you will want to take the standard deduction anyway. That means you would not get any deduction.