Expat Tax Returns: Deducting Your Overseas Job Search

Expats Living in Japan

If you recently moved abroad or are planning to because of your spouse’s work relocation, you may find yourself considering new employment options. Thankfully, the IRS may provide some perks to help you with your job search.

As an American living abroad, you will need to file expat tax returns. But if you decide to look for a new job while abroad, you may be able to deduct some of your job-hunting expenses on your federal expat tax returns. There are several items to consider in order to meet the expat tax deduction guidelines.

Top Considerations To Job Search Deductions When Filing Expat Tax Returns

First, you will need to look for a new job that is in the same line of work as your current profession.  You will not qualify for deductions on your expat tax returns while looking for a job in a new occupation.

You can deduct from your expat tax returns 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 prior year.

You can deduct from your expat tax returns the amount you spend for preparing and mailing copies of your résumé to prospective employers. Again, this applies to job searches within your present occupation.

If you travel to look for a new job, you may be able to deduct travel expenses to and from the area to which you traveled. 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.  Also, as an American living abroad, you will need to pay extra close attention to the places where you travel to seek employment. Check with the IRS by calling 800-829-3676 for specific location qualifications before booking your travels.

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. It’s recommended that you check with the IRS to make sure the length of the break is acceptable.

You cannot deduct from your expat tax returns job search expenses if you are looking for a job for the first time.

The amount of job search expenses that you can claim is limited. To determine your deduction, you can use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction and the total of all miscellaneous deductions must be more than two percent of your adjusted gross income.

You can find more information about job search expense deductions by reviewing the IRS’s Publication 529, Miscellaneous Deductions.

Questions About Your Expat Tax Return?

Make sure you expat CPA understands all of the deductions available for your expat tax return. If you have questions about what deductions are available when searching for a new job, or if you would like more information about filing expat tax returns, please contact us.