Many people are currently looking for employment as layoffs are common and the U.S. economy continues to struggle.  If you are among those pounding the pavement, be sure to save your receipts since expenses related to job-hunting in your present line of work may be tax deductible, even if a job is not found.   Remember that expenses incurred when a job is sought or found in a new trade or business are not deductible. 

The deductible portion of job-hunting expenses is the total amount of qualifying expenses minus 2% of your adjusted gross income (AGI) on your tax return.  This is reported on Form 1040, Schedule A.

Some qualifying job-hunting expenses include:

• Employment agency fees
• Executive recruiter fees
• Cost of printing and mailing resumes
• Career counseling to improve position in current trade
• Legal and accounting services fees related to employment contracts
• Advertising for a new job in your present field
• Telephone charges to prospective employers
• Transportation costs to job interviews (for car, actual expenses or standard mileage rate of 50 cents per mile for 2010)
• Cost of newspapers and business publications purchased for employment listings

Expenses for traveling out-of-town including meals, lodging and local transportation may be deductible as long as the primary purpose for the trip is to look for a job and not for personal reasons.  Retaining supporting documentation is recommended.  Also if you haven’t held a job for an extended period of time or just completed your education, your job search expenses will not be deductible.