Under certain circumstances, you can deduct the cost of looking for a job as a miscellaneous itemized deduction up to the amount your total combined miscellaneous deductions exceed 2% of your Adjusted Gross Income. To deduct job-hunting costs, you must be looking for employment in the same or a related field of work. If you satisfy the requirements, here are some of the costs you can deduct.
- The cost of transportation to and from job interviews.
- 50% of the cost of meals and entertainment which you incur because of your job search.
- The cost of out of town travel to seek new employment, including transportation, lodging, and 50% of meals and entertainment.
- Fees that you pay to job counselors, recruiters, and employment agencies.
- The cost of newspapers and other publications that you buy because of their employment advertisements.
- The cost of preparing and mailing resumes, including printing, envelopes and postage.
Even if you don’t find a new job, you can still claim these deductions.
Contributions limit to 401(k) plans continue to increase. For 2015, the maximum employee contribution is $18,000. Added benefit: For those taxpayers who are age 50 or older the catch-up contribution is $6,000 for a maximum total employee contribution of $24,000.
In general, a portion of home improvement can be a medical expense deduction if the primary purpose of the improvement is medical care such as a wheelchair ramp for a handicapped individual or an elevator for someone with a heart condition.
Determining how much of the cost of such improvements is deductible depends on whether the improvement becomes a part of the house or whether it is something that can be detached from the house. If it’s detachable, the entire cost of the improvement is usually a deductible medical expense. But if the improvement becomes a part of the house, you can deduct only that portion of its cost which exceeds the increase in the value of the house because of the improvement.
For example, the cost of a room air conditioner installed on doctor’s orders would be fully deductible because it is detachable and it does not increase the value of the house. However, a central air conditioner installed on doctor’s orders would be deductible only to the extent that its cost exceeded the increase in the value of the house. Therefore, if the central air conditioning cost $12,000 but added $7,000 to the value of the house, only $5,000 would be a deductible medical expense.
In the case of a tenant who rents property, the entire cost of equipment installed for medical reasons would be deductible, since a tenant does not own the property and would gain nothing from an increase in its value.
Tax savings. Defer compensation plans can be designed to defer salary or compensation to a later date. Under these plans, business people may elect to defer a determined amount of their income to a later year. This deferred income is then taxed only in the year received. These plans should be in writing and the decision to defer compensation must be made prior to earning that income.