Tax-Deductible Job Hunting Expenses – Finding Work Is Expensive!

Job Hunting Expenses Duck Hunt

Recently, I discovered that finding work is expensive. Fortunately there are tax-deductible job hunting expenses that make it less painful. Thanks to 33% of you voting that I should go back to work full-time, I decided to rev up the rusty job search engine after 3.5 years of inactivity.

And boy, what a waste of time and money it has been! Thanks for nothing everyone! If the percentage of you saying “yes” was 25% or less, I wouldn't have bothered. See how much y'all mean to me?

Let me share with you how much job hunting cost me with this one firm. It's a fintech company in the robust personal lending space where SoFi and their recent $1 billion in funding from Softbank is dominant.

I've already exhausted my learning curve in the the digital wealth management space so I thought it would be a good idea to expand my understanding in the payment or consumer lending niche. 

Tax-deductible Job Hunting Expenses

Here's a look into the details of my tax-deductible job hunting expenses from one job lead. The company is currently situated roughly 30 miles south of San Francisco in San Carlos.

Cost for day one:

  • 60 miles roundtrip at $3/gallon getting 30 miles a gallon = $6 + $12 in wear and tear.
  • Two hours interviewing where I value my time based on my average $600/hour consulting rate = $1,200. Interviewing is like real work.
  • One hour worth of preparation before the interviews = $600
  • Cost: $1,818

Cost for day two:

  • 60 miles roundtrip at $3/gallon getting 30 miles a gallon = $6 + $12 in wear and tear.
  • Six hours of interviews followed by one hour of dinner = $3,600
  • During my interviews, I provided a lot of guidance on SEO, content marketing strategy, the affiliate business, growth advice, branding, and the market landscape. They were basically extracting as much information from me as possible.
  • Cost: $3,618

Miscellaneous cost:

  • One hour spent with the recruiter on the phone. $600
  • One hour spent on the phone and e-mail correspondence with the employer. $600
  • Cost: $1,200

Total Cost: $6,636

Time is money and I'm not going to get any of that wasted time back. It would have been one thing if the firm reimbursed me for my time or offered up a part-time consulting contract. But I got nothing.

The opportunity didn't work out because the compensation was too low. They were offering around ~$120,000 + options, which is what 29 year old MBAs with zero experience get at startups nowadays. Furthermore, the scope of the work didn't seem large enough for my background.

I didn't mind the first trip down as I'm always looking for new business development partnerships. It was the second trip where I was trapped in a room for six hours. And then I had to go back and forth fielding more questions for another week. That irked me.

With this latest experience I plan to never look for a full-time job again. Even though I can write off the tax-deductible job hunting expenses, I can't get that time back.

If someone wants to hire me, they'll have to make the effort. It's incredibly difficult to convince anybody that I'd ever want to work full-time again given my current financial situation.

While some people job hop every 1-3 years, I have a track record of loyalty with 11 years at my previous firm. And roughly a decade here at Financial Samurai.

Related: How To Get Hired If You Are Overqualified Or Don't Need The Money

What Job Hunting Expenses Can I Deduct?

According to the IRS, here are the requirements you must meet before deducting your job hunting expenses. Words in blue are my comments.

  1. To qualify for a deduction, your expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation. -> Seems like a gray area to me given a lot of job occupations are multi-function. 
  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 received in your gross income, up to the amount of your tax benefit in the earlier year. -> I didn't pay a head hunter. They just reached out to me over LinkedIn. 
  3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation. -> Everything is done online now. But I did have to print out 10 resumes to bring with me to the interviews, just in case. 
  4. If you travel to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area to which you travelled. 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 unrelated to your job search compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. -> Time to expense my gas and wear and tear!
  5. You cannot deduct your 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. -> What is the definition of “substantial break” IRS? Good thing I'm always looking for a job opportunity, and so should everyone else. 
  6. You cannot deduct job search expenses if you are looking for a job for the first time. -> No virgins allowed!
  7. In order to be deductible, the amount that you spend for job search expenses, combined with other miscellaneous expenses, must exceed a certain threshold. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction and include:employment and outplacement agency fees, resume services, printing and mailing costs of search letters, want-ad placement fees, telephone calls, and travel expenses. The amount of your miscellaneous deduction that exceeds two percent of your adjusted gross income is deductible. -> 2% of your adjusted gross income is a good amount. The way I see it, the IRS encourages people to spend lots on a job hunt in order to deduct e.g. $2,000+ in job hunting for a $100,000 job.  Those hotels, airplane tickets, and meals are expensive!

For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on or by calling 800-829-3676.

Related: Examples Of Great Resumes That Get Jobs

Deduct What It Takes To Find A Job

Notice the one thing we can't deduct according to the IRS is the value of our time. Of course, the value of our time is incredibly subjective. But wouldn't you agree that time is the most valuable item of them all?

If each job listing described the estimated amount of time to land a job followed by a certain percentage chance of getting the job, surely this would deter people from applying. For example 10-15 hours of time interviewing for a 5% chance of getting the position.

Before spending too much time with a perspective employer, it's important to do as much due diligence on them as possible. 

Have the employer set the expectations up front for what is required of you and don't let them keep changing the scope of your work. Be greedy for yourself just like the employer is greedy for themselves.

My mistake was being too flexible and not feigning enough interest. I was very candid with my thoughts, which is what tends to happen when you are financial free. Your ability to bullshit about how much you love the company, the product, and the mission weakens considerably when you can book a flight to Hawaii any time.

No Job Is Perfect

Let's be honest, unless you are eradicating diseases or saving starving children, there is no job out there that's truly amazing. The founder who shared about how he found his passion to start a credit card comparison product after getting fired from his hedge fund job during the depths of the financial crisis is total crap.

Few employers will compensate you for your interview time. Therefore, you must be very judicious with your time the more you value your freedom.

What this employer did was give me the motivation to not let my time with them go to waste by developing a stronger relationship with their primary consumer lending competitor. Close to $6,000 worth of my time was lost, so I plan to make much more than that back over the next 12 months!

Finally, the one thing I consistently desire is the motivation to write more articles based on my good and bad experiences. So in this regard, I'm thankful that not all is lost.

Recommendation For Leaving A Job

If you want to leave a job you no longer enjoy, I recommend negotiating a severance instead of quitting. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.

When you get laid off, you're also eligible for up to roughly 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.

Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye, on how to negotiate a severance.

It's the only book that teaches you how to negotiate a severance. In addition, it was recently updated and expanded thanks to tremendous reader feedback and successful case studies.

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There's nothing better than starting your own website to own your brand online and earn extra income on the side. Why should LinkedIn, FB, and Twitter pop up when someone Google's your name? With your own website you can connect with potentially millions of people online, sell a product, sell some else's product, make passive income and find a lot of new consulting and FT work opportunities.

Every year since 2012, I've found a new six-figure consulting opportunity thanks to employers finding Financial Samurai online. Start your own WordPress website with Bluehost today. You never know where the journey will take you!

Updated for 2020 and beyond. Not a day goes by where I'm not thankful for starting FS in 2009. Now that I have a son, I cherish every day I get to spend at home taking care of him rather than commuting through hellish traffic to sit in an office for 12 hours a day dealing with politics!

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40 thoughts on “Tax-Deductible Job Hunting Expenses – Finding Work Is Expensive!”

  1. Curious at which salary level would you do a FT job?

    Assuming you are in 39.6% Federal + 13% State Tax bracket, = 53%
    what you take away is less than half.

    200K salary becomes 94K
    129k salary becomes 60K (This was their offer, right?)
    100K salary becomes 47k

    to spend your golden hours of the day at the office
    dealing with beauracracy, politics, meetings, travel and a little bit of actual work?

    Not sure what that number has to be to make it worth it.

    1. 39.6% Federal and 13% State is for income over ~$400,000.

      How about you? What level of net worth and passive income would you require to no longer work? What if you found work that you liked?

      1. Passive income of 200k a year is more than enough… i would spend 40k a year in regular things i do now, then another 100k vacationing every year. The rest i guess tax and to charity.

        Obviously, humans get to 200k then they tend to want 500k. I havent changed my spenditures for the past 5 years.

  2. Joe Six Pack

    Hi Sam,

    Can you do a post on self-insurance when it comes to health care? I am 30 years old, single, no dependents, and in good health. I think I spent about $100 in total so far this year (visited doctor when I got the flu). What combination of cash and/or catastrophic plan would you recommend to someone like myself to be able to self-insure? I am in the US.


  3. So is it kosher with the IRS to deduct job hunting expenses if I’m still employed? I make it a point to interview at least once a year to keep my skills sharp. Sometimes that involves travel which I usually get the hiring company to pick up but not always.

    1. You absolutely can. But since a longer post I submitted has mysteriously disappeared, let me point out that you cannot deduct the value of your time.

      1. From the post,

        “Notice the one thing we can’t deduct according to the IRS is the value of our time. Of course, the value of our time is incredibly subjective. But wouldn’t you agree that time is the most valuable item of them all?”

        1. I might, and you might, but that doesn’t mean the IRS might. The IRS wants to see tangible items you can back up with receipts. So if you want to deduct your $600 an hour times 11 hours, be my guest, but if you’re audited and the IRS disallows your deduction (as it inevitably will), then you’ll be paying penalties and interest and therefore more tax than if you had simply not claimed the deduction in the first place.

          So if I were your IRS auditor, I would disallow $6600 of “time.” However, I would allow you your phone charges, plus standard mileage of 57.5 cents per mile (2015 rates) which comes to $69 (not your $36) for use of your car, plus 1/2 the cost of any meals you bought for yourself while traveling. And since that’s not likely to hit the 2% floor, no deduction.

          Oh, and since this post took me 10 minutes to write and my consulting fee is $500/hr, you can pay me the $83.33 by Paypal.

            1. Yeah, that kind of got buried near the bottom of the post.

              Time to write this: 30 seconds, or $4.17. Due on receipt.

  4. Hi Sam,

    I really enjoying reading your articles. Although, I am not successful like you are, it reminded me this quote. “Life is about making an impact, not making an income.
    ” – Kevin Kruise. I agree money is a big factor when looking for job but I rather choose making an impact to the organization. I rather enjoy what I do “every day” and adjust my lifestyle to what I currently make. Keep the good writing! One day, I would like o become an entrepreneur like you.

    1. There is no better feeling than building something from nothing and watching it grow. The income is definitely a great benefit. The more importantly, it’s the freedom to choose what you want to do every single day that is the most valuable aspect of entrepreneurism.

  5. Sam, I had to chuckle when I read your current article about your job interview. I wrote you awhile back about being disappointed in you going back to work, I guess I was one of the 66%. I also knew, once you become your own boss, you will never be able to go back to working for someone unless you are not a true entrepreneur.

    Let’s be honest, it’s not about the money when you get to a certain level, it’s about control of your own destiny and you aren’t going to work for people that are less competent and have them tell you what to do.

  6. Romeo Jeremiah

    Interesting experience, Sam. I’m sure you won’t put it out to the public, but it would have been interesting to know what salary you would have taken. According to your $600/hr rate and given a 40 hr weekly job (which is probably unheard of with startups) you’ll have to accept no less than $1,248,000/year!

    That being said, you’ll never be satisfied if you make it about the money, right? Would the results have been different if there was a perfect balance between fulfillment and the $129k?

    1. Good math! The answer is: not all hours are created equal. I’ve decided on a set amount of hours to work a week that is ideal. Then I’ve decided to maximize the return for those set hours. More is described in The Samurai Method To Investing.

      That satisfaction ALWAYS come from the challenge of doing something you thought you couldn’t do, or doing something that someone else believes you can’t do.

      I was looking for fit first, and then a fair market salary after.

    1. I think the consumer lending space in fintech is the strongest subset at the moment. There is a number I would take, but I decided in the back of my mind that the best would be to consult with them part-time instead, like I have done for three other fintech companies. Unfortunately, nothing ever came up.

      So, to make lemonade, I’ve decided to work with the leader instead of a scrappy follower.

  7. Lance @ HealthyWealthyIncome

    Don’t come back!

    Could expand Yakezie in to your own full time company where you have folks doling out advice to bloggers who have no idea what they are doing. You’ve been giving out advice for years for free. Could have thousands of bloggers, writers and SEO folks flocking to you for real experience on building leads, traffic, revenue. Who wouldn’t pay $200-300 for some lessons that help them pull $1000’s from their site? Could still offer the free, but offer a premium to learn the real stuff for building an online brand.

    Then you are ready to sell and/or take in funding and pay yourself like your old buddy did with his new digs in New York and retire again? My neighbor just showed me his $275,000 cut from a successful funding for his company. I wondered why he hadn’t been going to work the last month. How many times do you want to retire?

    1. What I learned from the blog network is that dealing with lots of people can be A LOT of headache. I don’t want to be in the business of managing/tutoring people full-time. I should write a book on developing a profitable online platform though. That’s a no brainer. Just need to write it!

      As I wrote in, SweAt Dreams OF Being A Millionaire Again, a lot of it has to do with the challenge. When folks say I cheated by having a high paying job, then I challenged myself to build a million from nothing with an online platform. And when folks say it’s not fair that I have an online platform, then I want to prove building something from nothing was no fluke and try something new. It’s fun!

      Hope all is well!

  8. Ah…I forgot to mention one other thing I found to watch out for when interviewing. Recruiters (and sometimes hiring managers) are sometimes using LinkedIn to plumb their candidates for referrals and to find other candidates. That is, I often get an innocent-looking request from a recruiter to “connect” and they sometimes appear interested in talking about a potential job, but then later find out that they used my other connections to find the candidate they’re looking for. As a manager in the tech space, I’ve worked hard to make connections and find people who are worth hiring, and it burns my behind when someone tries to grab that experience for free.

    While LinkedIn is great for finding candidates and has more or less revolutionized recruiting and job-searching, it can be used for good or for evil. I try to limit the connections I have and also try not to accept connections unless I know it’s from someone I can trust. I also regularly prune my connections list to weed out former recruiter contacts and others I don’t know too well.

    Unfortunately, the way social networking works, this is kind of hard to prevent completely (and you want to use it this way for your own gains), but it’s become easier to spot a recruiter who is just looking to pad their own contact list.

  9. Sam, This was really a refreshing article, given that I just went through some similar experiences. I’m also more or less FI, but I’ve decided to work another few years for some $$ for home improvements rather than dipping into savings. I was contacted by a very earnest recruiter for a job that couldn’t have been more identical to what I was doing for the last 7 years. The company is one that I’ve been interested in for a while, and it seemed like a good fit after talking to the hiring manager. Then the shoe dropped: they wanted me to come into an interview where I would prepare a 1-hour presentation on my experience/portfolio and then provide directed feedback for improving their own website. I decided to do this, and it proved to be interesting, but at several points in the 3 hours of follow-up interviews, many of the interviewers asked me how I would solve very specific problems they were having right on the spot. So, I gave them a lot of information about similar problems I had at a different company and some advice on what to do. I did feel like they got a lot of consulting time for free.
    After all of that, they ended up going with a different candidate (presumably one that gave them even more free consulting).
    The moral of the story is, don’t provide something for free unless you’re getting something in return. I’ve been treating all of the interviews I’ve been going on as information-gathering exercises. The kinds of things I expect out of any interview are: 1) do I think this is a company I would want to invest in (you can’t get better info than candid on the ground experience from an interview when making decisions about the management of a company) and 2) is there something here that I may want to exploit in terms of either writing about the experience or using it to benefit my colleagues (either giving pro or con recommendations to others).
    As such, I really enjoy interviewing at startups. I once interviewed at one where it became clear right away that I was not going to be working there, but they kept inviting me back to talk to more executives higher up on the chain (eventually their VP of engineering). Through that experience I realized this wasn’t a company or industry sector that was worth investing in, and it was invaluable in terms of psyco-analyzing silicon valley startup executives.

    If I really want to work more, however, I’ve decided that I’m only going to pursue positions where a colleague recommends me and I don’t have to do any intensive interviewing. If they want my expertise, they’ll have to pay for it up front.

    1. You are exactly right. So many of these startups are using potential candidates to get free advice. A lot of startup employees do not have a lot of experience because they are on the younger side or the space is relatively new. I met with their “resident SEO expert” who has never build a highly SEO ranked site that generates perpetual traffic, leads, revenue. She was nice, but I felt like the entire time I was sharing advice on how she could do her job better.

      A players hire A+ players. It’s the B players who hire C players, who then hire D players because they are insecure.

      At the very least, I have a platform here to fight back if I wanted to, or write about my experience.

    2. Your premise is right on, it can be very valuable and I have done it myself to gain insights a few times. However, be even more judicious. In your example up to the “VP engineering” level, you didn’t talk to the people truly guiding the company in the ways that matter. As someone who has lived at this level for 20 years, “executives” (my 2 cents) are the people who actually are directly commissioned at the top-most level to deliver some stakeholder/shareholder value. They do that by really directing the vision, financial and operational management, relationships, alliances and go to market/customer approach of the company and have bottom line accountability. At established companies, you may (may, not necessarily) avoid the situation of knowing more and being more than the people interviewing you.

  10. Thanks for the update! It’s eye-opening to see just how much it costs to search for a new job, and there are no guarantees. Maybe uber is the right way to go, and continuing as you are. Whatever it is, at least YOU will decide, and not get to the end of your life, wishing you’d done something else. Always glad to read your posts!

  11. Even if the opportunity wasn’t right, the experience does give you more fodder for the site

    As for the founder finding his passion, it’s not that there was some latent passion for credit cards hidden deep in his psyche that was unearthed. More like things go well, and you get passionate about it because things go well, and then you look back and say you were passionate.

    I wasn’t passionate about credit cards before Bargaineering and I didn’t have a love of writing either (I got a 500-something on my SAT II Writing), but I got passionate for both because they were my engines of wealth. Now I love writing and I love credit cards. :)

    1. I can see that. Progress is happiness. By finding progress hocking credit cards for money is not something I would say is helpful to the mass consumer given consumer debt is a big problem, or can be.

      But, without such massive consumer debt, companies like SoFi and others wouldn’t be around! Always a silver lining.

  12. Don’t let the time go to waste by leveraging your experience and your new contacts into a consulting gig! Feel free to charge $1,000 per hour to cover the free information you already gave them.

    1. Unfortunately, it doesn’t work like that in job interviews. Maybe the government needs to introduce job search reform! :)

      But trust me, I’ve learned my lesson with this experience.

  13. So, as a recent early retired dude I can relate to what you are going though…I’m one of the people who suggested you give it another go. It is absolutely frustrating to go through the whole process just to have a silly offer thrown out there in the end. Personally my debate is to do some consulting on the side just to stay current in the industry I left, but it is challenging because I don’t really miss it. Just keep plugging away, think of it like dating…you may really like the first girl you go out with, but without a larger sample size you may be missing out on the real keeper (of a next job that is :)

    1. It really is all about the right FIT. In this case, the job was too junior a roll for me. My colleagues would be 25-28 years old, for example, with under three years of direct relevant experience. They are nice folks. The fit just didn’t work. It would have worked if they offered a lot more though :)

  14. Ha! Love the piece! Must be fun to just apply and see if anyone will give you a solid offer to try and learn something new. Can’t hurt, right?

    1. I’m always trying to learn something new, especially as it relates to financial technology being in the Bay Area. But, the hurt in this case is the hours of time I won’t ever get back!

  15. Sam,

    Did you at least drive for Uber on the way down or back? That would recover some of the cost.

    Unfortunately you have to feign interest and do the homework on the company if you ever want to secure the big offer. But so not to waste your time try and find out how much the top mgmt are making so you can determine if you would be able to fit into that comp structure.

    My time as an independent contractor is in the range of $600 – $1000 per hour but this is for very intense value added work.


    1. I did not. It would be nice if I could only accept a rider going down south, but that technology is not there yet. That said, I know Uber is beta testing their “Uber Destinations” feature that will roll out soon to all drivers. I know this b/c I was just in their HQ this week. New post coming up!

      Top management at startups usually top out at $200,000 in Silicon Valley. Most make less. It’s their massive equity that is what they hope will be worth something.

  16. Luckily, you’ll make back your $5,936 over time by posting this article ;)

    I don’t see why you would want to go back to full-time either. Once, I leave I ain’t never going back. :)

    1. Perhaps one day. I do have to say though, it becomes so easy to write about topics once you’ve experienced it yourself. If I can tell a story in a post while adding value, that is a good formula for growth as an online publisher. There’s always a bright side!

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