Unemployed for 7 Mo's in 2007....any special Tax Deductions???

Question

I took a buyout from one of the Big 3 due to their downsizing efforts (in Southeastern Michigan---a very economically challenged area, highest foreclosures in the country) and was unemployed though actively seeking employment for 7 months. I finally landed a job for 65% less pay just to keep the lights on. During my job search I spent a considerable amount of money on resume paper, interview clothing, and other office supplies...Is it possible to claim some of this on my tax return---gas money, groceries, anything?!? I need to get all I can back on my return this year. Any suggestions you have would be greatly appreciated.

Answer 1

Job search expenses are deductible as a misc. itemized deduction subject to 2% of your income. If you do not itemize, there is no tax benefit to the job search expenses. Clothing for the interview would not be deductible as you could wear it at other times.

Ordinary personal expenses (groceries, etc.) remain non-deductible whether you are employed or unemployed.

Answer 2

Not groceries. Not clothing that can be worn for non-work purposes (such as business suits that can be worn for weddings and funerals).

Probably the resume paper, etc., that was used for job searching (although you could have saved money by e-mailing your resumes), but only if for a new job in the same field and see the previous answer about percentages, etc.

The tax benefits to unemployment are:
1. In some states, you can subtract the unemployment compensation payments when you calculate your income subject to state income tax.
2. You can use HSA money to pay your health insurance premiums (all health insurance premiums while receiving unemployment compensation, only COBRA payments after unemployment compensation stops).
3. If you find a new job at least 50 miles farther away from home than you old job was and you can move there and take the job, you can deduct your moving expenses.

Answer 3

The job search expenses must be for a job in the same field.

Chances are even with the huge drop in pay, you won't have enough to itemize. Or get a tax benefit if you do itemize.