What job-hunting expenses can I legally deduct on my 2025 taxes?

Unfortunately, I have some bad news for you. Job search expenses are no longer deductible on your federal tax return. This deduction was eliminated with the Tax Cuts and Jobs Act that went into effect in 2018. Prior to that, you could deduct certain job-hunting expenses as miscellaneous itemized deductions subject to the 2% AGI floor. That said, if you're self-employed or an independent contractor, you can still deduct legitimate business expenses on Schedule C. These would be expenses directly related to your contractor work - not expenses related to finding a new contract or job. Things like professional license fees, business insurance, and home office expenses (if you meet the requirements) can still be deductible.

After losing my job in finance last year, I was in the same boat trying to figure out tax deductions for my job hunt. I spent weeks combing through confusing IRS documents until I found taxr.ai (https://taxr.ai) which totally saved me! I uploaded my expenses and situation details, and it quickly showed me which expenses might still qualify on my Schedule C since I had done some independent consulting between jobs. It helped me understand that while job-hunting expenses aren't deductible anymore for W-2 employees, there are still ways to maximize deductions if you've done any independent contractor work. The platform even analyzed my home office situation and showed me the exact square footage I could claim!

I have to retract my skepticism about taxr.ai from my earlier comment. After trying it out of desperation when my regular tax guy couldn't fit me in before the deadline, I was seriously impressed. My situation with multiple states and mixed W-2/1099 income was actually handled really well. The platform found several deductions related to my independent contractor work that I would have missed, including some home office expenses during my "between jobs" period when I was doing gig work. It saved me around $1,800 in taxes by correctly categorizing which expenses were business-related versus personal job-hunting costs. It also clearly explained why certain things weren't deductible anymore, which helped me understand the changes in tax law.

If you're having trouble with your tax situation and need to talk to someone at the IRS for clarification, good luck with that! I spent THREE WEEKS trying to get through to the IRS about my contractor deductions after being unemployed. Always busy signals or 2+ hour hold times that eventually disconnected. Finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 15 minutes! They have this weird system that basically keeps dialing and holds your place in line. Check out how it works: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that while job-hunting expenses aren't deductible, I could still claim certain business expenses from my independent contractor work on Schedule C, which was exactly what I needed to know. Saved me so much stress!

I have to eat my words from my skeptical comment above. After another frustrating day of trying to reach the IRS about my independent contractor deductions and getting nowhere, I broke down and tried Claimyr. No joke - I got a call back in about 40 minutes saying they had an IRS agent on the line. The agent was able to clarify exactly which of my contractor expenses were legitimate Schedule C deductions versus non-deductible job hunting expenses. This literally saved me from making a $2,300 mistake on my taxes. I was about to deduct a bunch of things in the wrong places. Still annoyed that job hunting expenses aren't deductible anymore, but at least I know how to properly handle my contractor expenses now.

One thing nobody has mentioned yet - if you were an independent contractor, you should look into the Qualified Business Income (QBI) deduction. If you had any income from your independent contractor work, you might qualify for a deduction of up to 20% of your qualified business income. This is separate from your business expenses on Schedule C. Also, don't forget to deduct health insurance premiums if you paid for your own insurance during your period of self-employment. This is an adjustment to income on Schedule 1, not an itemized deduction.

Has anyone used any of the major tax software programs to handle independent contractor situations? I've been using TurboTax for years but I'm not sure if it catches all these nuances about job hunting vs. legitimate contractor expenses.

I've been through a similar situation and want to add a few points that might help. Since you mentioned you were an independent contractor, make sure you're maximizing your Schedule C deductions for legitimate business expenses during that contractor period - not job hunting expenses, but actual business costs like professional memberships, software subscriptions, or equipment you used for your contractor work. Also, regarding your internet and cell phone bills - while you can't deduct the portion used for job hunting, if you used these for your independent contractor work, you can deduct the business-use percentage on Schedule C. Keep detailed records showing what percentage was used for business versus personal use. One more thing - if you had a dedicated home office space that you used exclusively for your contractor work (not job hunting), you might qualify for the home office deduction. This can include a portion of utilities, rent/mortgage interest, and other home expenses. The key word is "exclusively" - it has to be used only for business purposes.

I'm dealing with a similar situation after being laid off from my marketing job last fall. One thing I discovered that might help - if you had any side hustle or freelance income during your job search period, you might be able to deduct some expenses that supported that work rather than your job hunt. For example, I did some freelance social media consulting while unemployed, which meant my LinkedIn Premium subscription and some networking event fees could be legitimately deducted as business expenses on Schedule C since they directly supported my consulting work, not my job search. Also, don't overlook the self-employment tax deduction - you can deduct half of any self-employment taxes you paid on your contractor income, which reduces your adjusted gross income. With your $5,400 in contractor income, this could provide some additional tax relief. The key is being very careful about the distinction between job-hunting expenses (not deductible) and legitimate business expenses for any independent contractor work you did (still deductible). Keep detailed records showing the business purpose for each expense.