With the U.S. unemployment rate at 8.3%, many Americans are left looking for a new job. You may be able to deduct some of your job hunting expenses like phone calls, career counseling and the costs of preparing and mailing your resume if you are looking for a new job that is in the same line of work. The IRS recently released a list of seven tips to keep in mind when deducting costs related to your job search. Here is what you need to know:  You Must Be Searching For A Job In The Same Line Of Work This factor is key! In order to qualify for a deduction, your expenses must be spent on a job search in your current occupation. If you are looking to change careers, you may not deduct expenses you incur while looking for a job in a new occupation.  You Can Deduct Employment and Outplacement Agency Fees Any fees acquired from employment and outplacement agencies while looking for a job in your present profession can be used as a deduction. Furthermore, it is important to note that the IRS correspondingly states, “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”. Cost Of Preparing And Mailing Your Resume Qualifies As A Deduction When looking for a job, your resume is often the first thing your potential employer sees. Having a professional resume is very important and paper, envelopes, portfolios and postage add up. As long as you are looking for a new job in your present line of work, you can deduct the amounts you spend on preparing and mailing copies of your resume to prospective employers. Tip: In order to insure you deduct your amount spent properly, keep all receipts and record the purpose of each purchase.  Travel Costs May or May Not Apply 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 as long as: The job is in the same line of work. The trip is primarily to look for a new job. Tip: To determine if the trip is primarily to look for a job or personal, compare the amount of time you spent on personal activity to the amount of time you spent looking for work.  There Cannot Be A Substantial Break Between Jobs If there is a substantial break between the end of your last job and the time you begin looking for a new one, you cannot deduct your job search expenses. Therefore it is important to start looking for a new job as soon as possible! Looking For Your First Job? No Deductions Apply Sorry recent high school and college grads, you cannot deduct job search expenses if you are looking for a job for the first time! MOST IMPORTANTLY: Your Job Search and Other Miscellaneous Deductions Must Exceed 2 Percent of Adjusted Gross income The IRS states, “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. The amount of your miscellaneous deduction that exceeds two percent of your adjusted gross income is deductible”. For instructions on how to properly fill out the Schedule A, Itemized Deductions form click here.

Many colleges are now cutting back on grants and scholarships causing American families to opt for a lower-price public in-state school or borrow more money to afford college. With many students or families taking out loans to go to college, it is important to know all the facts about the student loan interest deduction for your federal tax return. The student loan interest is reported on Form 1098-E in box 1. The student loan interest deduction allows you to claim a maximum of $2,500 in student loan interest deduction if you are currently paying student loans, but this varies with income.  Student Loan Interest Defined Student loan interest is the interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments. Who Is An Eligible Student? An eligible student is one who is enrolled in at least half-time in a program leading to a degree, certificate or other recognized educational credential. Note: Half-time= the student was taking at least half of the normal full-time work load  Can You Claim The Deduction? You can generally claim the deduction if all of the following requirements are met: Your filing status is any filing status except married filing separately. No one else is claiming an exemption for you on his or her tax return. You are legally obligated to pay interest on a qualified student loan. You paid interest on a qualified student loan.  What Are Qualifying Education Expenses For The Student Loan Interest Deduction? For the purposes of the student loan interest deduction, qualified education expenses are the total costs of attending an eligible education institution.  The expenses include amounts paid for tuition and fees, room and board, books, supplies, equipment and other necessary expenses.  Type Of Loan Interest You Can Deduct In addition to simple interest on the loan, if all other requirements are met, the loan origination fee, capitalized interest, interest on revolving lines of credit, interest on refinanced student loans and voluntary interest payments can be considered student loan interest.  Loan Origination Fee Commonly, there is a one-time fee charged by your lender when the loan is made. In order for the loan origination fee to be deducted as interest, the fee must be used for the use of money rather than for property or services. Capitalized Interest Capitalized interest is the unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan.  Capitalized interest may only be used as a deduction when payments of principal are made on the loan. Note: In a year where no payments were made on the loan, no deduction for capitalized interest may be made. Interest on revolving lines of credit Interest on credit card debit may be used as a student loan interest deduction only if the credit card or line of credit was used to pay qualified education expenses. Interest on refinanced Student Loans Interest on refinanced student loans includes consolidated loans and collapsed loan. Voluntary Interest Payments Voluntary interest payments are payments made on a qualified student loan during a period when interest payments were not required. IRS Publication 970- Tax Benefits for Education can provide further information and how to properly claim the student loan interest deduction.

Tax scams are more and more common every day. As the economy continues to struggle, more and more people are trying to find an easy dollar. The IRS is constantly trying to stop tax scams, crimes that hurt not only the IRS but ultimately hurt YOU the tax payer. By recognizing various tax scams you can help prevent them and report them. Participation on a tax scam can result in prison time and fines not to mention repayment of taxes with penalties and interest. Here are a few of the most common tax scams. If you are a victim of or witness to one of these scams make sure that you report them to the appropriate contact shown here. Abusive tax schemes can take a multitude of forms. They can include anti-tax law, misstatement of a home based business, trust fraud, and fraudulent off-shore activities. One of the most common forms is the preparation on fraudulent tax returns. By misstating income, deductions, and taxes paid, people have found a way to show mammoth tax refunds with hopes that the IRS won’t catch their errors and will pay the refund. There have been a number of cases in recent years where people claimed refund in the MILLIONS of dollars. Retirement plans are also a common source of tax fraud. People may report fraudulent withdrawals and/or contributions in an effort to gain a tax benefit. Finally, one of the great benefits that the IRS provides are those to tax exempt organizations. In many cases these are charities. While the benefits are wonderful and meant for those who need them the most, this has not stopped criminals from taking advantage of those and forming fake or fraudulent organizations. Keep in mind that these are just a few of the many ways criminals make an effort to trump the system. If you become aware of any of these scams make sure to report them to the IRS ASAP. Remember, these types of crimes hurt us all.

Typically during the hot months of summer or during the cold months of winter energy prices tend to soar. Nothing is more upsetting than receiving an electric bill that looks more like a brand new car payment! Rather than just paying the bill, many people are considering alternative sources of energy. The best part about it is that there is a tax credit available to help you save money on your tax return. The residential energy efficient property credit is still available to help pay for qualified residential alternative energy equipment. The equipment includes solar hot water heaters, solar electricity equipment and wind turbines. The credit runs through 2016 and is 30 percent of the cost of qualified property. There is not a cap on the amount of credit available, except for fuel cell property. Generally, you can include the cost of labor and the best thing is you can carry forward any unused credit amounts to future years. Qualified equipment must be installed on your home located in the United States. Before you buy, make sure you have the manufacturer’s tax certification statement. Energy bill fluctuations can be a pain but the residential energy efficient property credit could save you money down the road. For more information on this tax credit, visit our Knowledgebase here.