My husband graduated from medical school a few months ago and we moved to California, where he's doing his residency. Can we deduct our moving expenses and his job-search costs from our 2004 taxes?
You can deduct your moving expenses if the new job is more than 50 miles from your old residence, but there's no break for expenses related to first-job searches.
You'll be able to deduct the cost of packing, storage (within 30 days of the move), and hiring a moving company or renting a moving truck, as well as one-way travel expenses to your new home for everyone in the household. You don't need to itemize to deduct these expenses. For more information, see IRS Publication 521, Moving Expenses.
The rules are a bit different if you have to move again, say, when your husband completes his residency. In that instance, you can only deduct moving expenses if your new job is at least 50 miles farther from your home than your old job was.
Unfortunately, you can't deduct his job-search costs, says Bob D. Scharin, editor of Warren, Gorham & Lamont/RIA's Practical Tax Strategies, a monthly journal for tax professionals.
"Those seeking employment for the first time cannot deduct their job hunting costs," says Scharin. "Likewise, those switching careers cannot deduct expenses incurred seeking employment in a new trade or business."
People who are changing jobs within the same line of work can deduct the cost of printing and mailing resumes, job-hunting phone calls, employment-agency fees and the cost of travel to attend job interviews, whether or not you end up getting the job.
These are considered miscellaneous itemized deductions (like employee business expenses and investment-related expenses), which means you can only take the deduction if you itemize and can only write off those expenses that exceed 2% of your adjusted gross income.
There are, however, a few other expenses that your husband can probably deduct. State medical licensing fees, dues paid to professional associations and the cost of books and other materials needed to perform his job are deductible, says Scharin.
But these employee business expenses are also considered miscellaneous itemized deductions and are subject to the 2% adjusted gross income floor (the rules are different for self-employed people). For more details about these write-offs, see IRS Publication 529, Miscellaneous Deductions.
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