Tax

Business Tax

Tax Benefits for Job Seekers

Some folks – especially these days – are polishing their resumes and attending career fairs in search of employment. If you are searching for a job this summer, you may be able to deduct some of those expenses on your tax return.

Here are six things you need to know about deducting costs related to your job search.

  1. To deduct job search costs, the expenses must be spent on a job search in your current occupation. You may not deduct expenses related to looking for a job in a new occupation.
  2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year.
  3. You can deduct amounts you spend for preparing and mailing copies of a resume to prospective employers as long as you are looking for a new job in your present occupation.
  4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the time spent looking for work is important in determining whether the trip is primarily personal or is related to your job search. (If you have questions about how to figure this, call us.)
  5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
  6. You cannot deduct job search expenses if you are looking for a job for the first time.

If you’d like more information about deducting expenses related to your job search, let us know. We’ll guide you through the process.

Accounting Tax

7 Tax Tips for Students with Summer Jobs

Are you a student with a summer job? Here are seven things you should know about the income you earn during the summer months.

1. All taxpayers fill out a W-4 when starting a new job. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. Taxpayers with multiple summer jobs will want to make sure all their employers are withholding an adequate amount of taxes to cover their total income tax liability. To make sure your withholding is correct, call our office.

2. Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tip income you receive is taxable and is therefore subject to federal income tax.

3. Many students do odd jobs over the summer to make extra cash. If this is your situation, keep in mind that earnings you receive from self-employment are subject to income tax. This includes income from odd jobs like baby-sitting and lawn mowing.

4. If you have net earnings of $400 or more from self-employment, you also have to pay self-employment tax. (Church employee income of $108.28 or more must also pay.) This tax pays for your benefits under the Social Security system. Social Security and Medicare benefits are available to individuals who are self-employed just as they are to wage earners who have Social Security tax and Medicare tax withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE.

5. Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.

6. Special rules apply to services you perform as a newspaper carrier or distributor. You are a direct seller and treated as self-employed for federal tax purposes if you meet the following conditions:

-You are in the business of delivering newspapers.

-All your pay for these services directly relates to sales rather than to the number of hours worked.

-You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.

7. Generally, newspaper carriers or distributors under age 18 are not subject to self-employment tax.

A summer work schedule is sometimes a patchwork of odd jobs – which makes for confusion come tax time. Contact us if you have any questions at all about income your child earned this summer season.

Tax

June Tax Calendar

June 1: Hurricane season starts today. After the devastating tornadoes so far this year, residents in potential hurricane paths know they need to be prepared, both for the potential storms and the subsequent financial chaos they can cause. And if you do suffer storm losses, the IRS might be able to help you recover.

June 6: Welcome to summer.  Get your home in energy efficient shape and save some tax dollars, too. And don’t forget about possible state-level tax benefits. They could help you get a double helping of energy tax savings.

June 10: Does your job include tips? If so and you received $20 in tips in May, use Form 4070 to report them today to your employer. 

June 14: Happy Flag Day. If you need to buy a banner to fly today, you might also get a tax break. Several states exempt the Stars and Stripes from sales tax. Check with your state’s tax department to see if you can save on your patriotic display. 

June 15: If you’re not paying your 2011 income tax through withholding, or will not pay enough tax during the year that way, your second installment of this year’s estimated tax payment is due today.

Also on June 15, if you’re a U.S. citizen or resident alien living and working outside the country or Puerto Rico or are on military duty abroad, today is your deadline to file Form 1040 and pay any tax, interest and penalties due. You can file for an extension, Form 4868, to give you until Oct. 17.

June 19: Happy Father’s Day!
Dad might not say so, but he appreciates being recognized, so take time today to let him know you care. If you also show your affection by providing for the bulk of dad’s living expenses (or mom’s, too, for that matter), be sure you claim him, her or both of them as dependents on your tax return.

June 25: Are you a June bride or bridegroom? Since the withholding rates are different for couples, both newlywed wives and husbands should file new W-4 forms at work to reflect their now-married tax status. Also, if the new missus changed her name, she needs to contact the Social Security Administration to make sure her tax ID number matches her new moniker. These tasks are just a couple of ways that marriage affects your taxes.

June 30: The year’s half over. 
It’s time to get rid of stuff you don’t need and give still usable items to your favorite charity.

Scroll to top