Whether a new job opportunity is across the country or across town, it's important to track the cost and strategy of a job search as closely as you track your career objectives.
Job seekers may qualify for tax deductions depending on their current employment status. For example, if you are currently employed and looking for a job in your existing field, you may qualify for a range of deductions for job-hunting expenses. However, if you are a first-time job seeker or someone who has been out of work for a significant time period, you may not qualify for similar deductions. Consider discussing a future job search with a qualified advisor who can focus on your specific circumstances. The conversation shouldn't be limited to tax issues alone. It is just as important to talk about pay, retirement savings and benefits issues as you move out of one job and into a new one.
Successful job searches take planning, and a good first step is raising your professional profile in person and online. A recent Jobvite study notes the current popularity of leading social media options in reaching employers, and if you have a specific employer in mind, they may have online options that allow you to receive their latest job openings via email or text. For more general research on occupations and industries, the U.S. Bureau of Labor Statistics' (BLS) Occupational Outlook Handbook is a wide-ranging and updated online resource detailing 10-year pay and hiring forecasts. Whether you're a first-time job seeker or a mid-career professional, the BLS site provides basic information that can guide your search into a specific field, company or city.
Check your credit reports. Remember that many employers screen applicants' credit reports as part of their candidate review. Go to AnnualCreditReport.com for free access to reports from the three major credit agencies - Experian, TransUnion and Equifax - to check for potential errors or credit negatives you need to repair.Monitor your expenses and check for deductions. Online job search and application sites have cut the cost of job-hunting substantially - people rarely snail-mail resumes and cover letters anymore - but job-hunting expenses still exist and should be tracked for potential tax savings if you itemize. Here are a few listed by the IRS, and note they apply very specifically to your employment status and field:
- Expenses may qualify as deductions only for a job search in your current line of work. You won't be able to deduct expenses for a job search in a new occupation.
- You can't deduct job search expenses if you're looking for a job for the first time or if there's been what the IRS calls a "long break" between your last job and beginning your search for a new one.
- If you travel to look for a job in a qualified job search, you may be able to deduct the costs of all or part of the trip.
- Again, if you're hoping to deduct all or part of any job search expenses, consult with a tax professional before you begin to look. They can help you design your search in the most tax- and potentially cost-efficient way to fit your circumstances.
Think through pay and benefits before you get that interview. In general, all job seekers should keep their full range of financial goals in mind as they plan and execute their search. Getting general industry pay and benefits information is important, but individuals need to know their current monthly income and expenses to see if the pay side of any potential offer is attractive. It's a good reason to create or re-evaluate your personal budget before you begin your search. If you have specific financial goals in mind, you might want to do more specialized budgeting as you aim for a particular salary offer.
Looking for work while you are employed always requires discretion, tact and timing with bosses and co-workers, but particularly because slip-ups can have financial and legal consequences. For example, it might be wise to time a search after you've gotten your annual bonus or after you've spent out your balances in Health or Flexible Spending Accounts (HSAs or FSAs) for qualified health care, dependent care or other approved benefits. Also, before your search, it might be worthwhile to review confidentiality or non-compete agreements you signed at the time your current employer hired you in case those agreements might restrict any element of your search.
Once you get an offer, you'll evaluate pay, but many employees forget to take a look at the value of potential benefits. You may not get all the details until your actual starting date, but see whether your future employer's human resources department can share details of the health, retirement or tax-advantaged benefits programs they offer. Above all, find out how soon you'll be eligible to sign up for your new employer's 401(k) retirement plan.
Finally, touch base again with your financial advisor before you accept a new position to make sure you evaluate the full range of your future employer's benefits and can transition retirement assets held by your old employer successfully.
Bottom line: Looking for work involves much more than finding a job with a better paycheck. It calls for a strategic search that matches career goals with personal financial objectives.
Jason Alderman directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney