Job-hunting and the Tax Man

October 20, 2009 at 8:19 pm Leave a comment

*One of the benefits of being laid-off or taking a buyout is that you can deduct all of your job-hunting expenses, right? Not so fast, say CPAs. As with so many other things in life, the IRS has tricky rules that apply.

Alan Dlugash, a partner in the tax department at Marks Paneth & Shron LLP in New York, kindly walked me through the rules that Congress imposed in a tax law rewrite in the 1980s. As Dlugash explained, “Congress needed some extra money, so they turned this deduction — a category of expenses incurred to earn income — into a situation where most people will not get a tax deduction.”

Here are the rules that apply:

*Rule No. 1.  A job seeker can deduct qualified job-hunting expenses only to the extent that the amount of the expenses is greater than 2 percent of adjusted gross income, also known as AGI. Dlugash and other CPAs say this rule alone makes the deduction moot for most taxpayers: For those with significant earnings, it will be difficult to get to 2 percent with job-hunting expenses, and for those with little earnings, they will be paying very little tax anyway, so the deduction isn’t helpful.

*Rule No. 2. If a taxpayer is subject to the dreaded alternative minimum tax, also known as AMT — a parallel tax system that has ensnared a growing portion of middle-class taxpayers in high-tax states — the job-hunting deduction is invalid.

*Rule No. 3. The taxpayer must be itemizing deductions, not taking the standard deduction. (Most homeowners and those with free-lance and other non-wage income usually do this;  so this rule isn’t that tough — but all three rules apply.)

So Dlugash and other CPAs say on its own the job-hunting deduction won’t help many laid-off workers. But some journalists can make it work for them — as deductions under the miscellaneous deduction against free-lance or other income as an independent contractor are fully deductible. “If your deduction is in connection with a trade or business as an independent contractor, then none of those limitations apply,” Dlugash says. “You get a deduction for the first dollar on.”

In other words, you can deduct expenses for such items as equipment, travel, and meals and entertainment (though the m&e deduction is limited to 50 percent of what you spend) against free-lance or independent contractor income; even if you have a loss.

Yet the clever IRS is on to this, figuring that some journalists and others who had regular wage income earlier in the year and then didn’t later on are claiming to have independent contractor status when they really are just job-hunting and doing a little bit of free-lance work on the side.  So as not to endanger the deduction and incur the wrath of the IRS, it’s important to be very careful — and to keep detailed records and receipts — to separate expenses incurred in free-lancing from general job-hunting expenses. “You’ve got to try to get the deduction as a free-lancer,” Dlugash says.

I’m interested in whether this issue is coming up in any tax law legislation being debated on the Hill; please let me know if you follow this and if changes are being discussed.

*Hill and federal jobs!!

An email correspondent passes on a few links for information and listings on Hill and federal jobs, which may be attractive to some laid-off or bought-out journalists. Here are two links, with information compiled by the office of Rep. John Carter of Texas:
Here are some good Fed job sources: http://carter.house.gov/?sectionid=63&sectiontree=4,63

This is a hideous-looking site but it’s still a resource: http://carter.house.gov/index.cfm?sectionid=148&sectiontree=4,148

*Jobs and opportunities:

*First, apologies. One link for a job listing yesterday was broken. The listing for the job at The American Prospect follows:

Associate Editor at The American Prospect

The American Prospect, a magazine of liberal ideas, seeks an associate editor with 3-5 years’ experience to report from a liberal perspective the political, economic, and social issues of the day, as well as to help edit the work of others and participate in the collaborative process of producing our online and print content. The ideal candidate is a self-starting, versatile writer and editor who has an abundance of article ideas and a good understanding of the Prospect and its worldview.The position will include writing daily posts for our blog, TAPPED; writing regular longer articles for the web site; occasional features and other content for the print magazine; assigning some web articles and assisting the web staff.

We seek someone comfortable and effective working with both print and online media, and with experience in writing, editing, and basic web development. Candidates should have a strong knowledge of and interest in politics and policy (economics, foreign affairs, U.S. electoral politics). This is a full-time position based in Washington, D.C., with a competitive benefits package.

To apply, please mail or email a cover letter, resume, up to five clips, and two references to:

Emily Parsons, Managing Editor
The American Prospect
1710 Rhode Island Ave. NW, 12th Fl.
Washington, DC 20036
Email: editjobs@prospect.org

AA/EOE: People of color and women are strongly encouraged to apply; we are committed to a diverse workplace, and to support our people with ongoing career development opportunities.

*The next is a free-lance project, but might be right for someone willing to take a chance on a free-lance documentary project:

DOCUMENTARY FILMMAKER SEEKING REPORTER FOR COLLABORATION

Associate producer with Spark Media, a D.C.-based documentary production company, is looking for a reporter with Capitol Hill experience to collaborate on an independent, freelance project about health reform.  The product will be a series of 3 to 5 minute mini-documentaries about different aspects of the health care reform debate.  I’m working now on the first one, essentially a series of interviews with doctors (outside white house, and those who were invited inside) about single payer and the public option. All heavily emphasize the importance of a strong public option for meaningful reform. I’m also trying to get a legislator for an interview.

The idea is to team up with a reporter who is interested in collaborating on this piece and the next, in helping to shape the storyline, find and conduct interviews, and help pitch the product to target political mags such as Mother Jones, Atlantic, Harpers, American Prospect, New Republic, and the like. If the pilot sells, I’d want to continue making similar projects on upcoming issues. For anyone who is interested I can send them a rough cut of the pilot.

If interested, please contact:
Oliver Lukacs
Associate Producer
Spark Media
202 463 6154 ext 116
323 594 0447 (cell)
olukacs@gmail.com1710 Rhode Island Ave. NW, 12th Fl.

*And the good folks at the Hotline asked me to pass along the word on an opening they have for a  staff writer. The listing I  picked up from journalismjobs.com:

Company: National Journal Group
Position:
Staff Writer – The Hotline
Location:
Washington, District of Columbia
Job Status: Not Specified
Salary: Not Specified
Ad Expires:
November 20, 2009
Job ID: 1111405
Website: http://www.atlanticmediacompany.com

Description:
National Journal Group’s The Hotline is the leading daily news briefing on American politics. Established in 1987, The Hotline “covers the coverage” from hundreds of newspapers, magazines, online sources, press releases, and radio and TV news shows.

The Hotline has an immediate opening for a full-time staff writer. Armed with a passion for politics, the ideal candidate would have a 4-year degree, strong editing and writing skills, and an alarm clock to cope with the 6 a.m. start time. Whether you have political experience and want to make the leap to journalism, or a journalism background and wish to increase your focus on politics, we offer a creative, fast-paced environment where your contributions matter.

For more information on our publication, please visit us at: http://www.nationaljournal.com/pubs/hotline/

Interested candidates should send a cover letter, resume and, if available, sample clips to: qmccord@nationaljournal.com

Happy hunting!!

Jodi

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How to prepare just in case…. Freelancer rules of the road

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