13 Jul Remember to Deduct Your Moving Expenses on Your Next Relocation
Regardless of whether you’re relocating to the next neighborhood or to another county, moving is time-consuming and some thought needs to be put into the expenses involved.
Luckily, the IRS provides deductions of certain expenses so long as you are qualified. Deducting these expenses can surely ease your budget and help you reduce costs in your next move. Here’s some more information:
Qualification for Tax Deduction Benefits When Moving
So, what does it take to be qualified for IRS tax deduction benefits? For anyone moving as part of the job relocation or if one has secured a new job elsewhere, you can have some of your moving costs deducted from your next filing. Ideally, the IRS only accepts moving deductions for job-related reasons. You may only qualify for a deduction if the reasons for you move is related to a change in employment.
The Time Test ( 39 Weeks Rule) – For the IRS to prove that you’re moving as a result of job-related reasons you must pass the famous IRS time test. This means that you must stay in your fulltime job for 39 weeks after the first year of your move and also reside within the area of your new job location. If you’re laid off or transferred within this period, we will lose eligibility.
The Distance Test (50 Miles Rule) – To qualify for tax deduction benefits when moving, it is are required that the distance from your old home to your new job location must be at least 50 miles apart. For instance, if you lived 5 miles from your old job location, the new job location must be 55 miles or more, otherwise you won’t qualify for this tax deduction package.
Self-Employed Individuals (78 Weeks Rule) – Individuals employed by the federal government or by private companies just require the above mentioned rules in order to enjoy a deduction. However, for the self-employed, you are required to comply with a total of 78 weeks of stationed employment. This means that you must work full time in your new job location for 78 weeks of your first 2 years after moving. For married couples, only one person needs to qualify.
What Expenses Can Be Deducted?
Deduction generally gathers for the expenses of moving yourself, your belongings and your family. This includes various costs such as:
- The costs incurred by hiring a professional moving company
- Insurance costs
- DIY moving trucks & pods expenses
- Packing-related expenses
- Gas/oil costs if you hire a truck or standard mileage costs if you travel by car
- Storage costs for up to 30 days after goods are moved from your household
- Costs associated with hiring someone to assist you in the relocation process
- Travel expenses for one trip
Other Things You Should Know
Note that deductible travel expenses do not include cost of meals during your move. Other non-deductible expenses include expenses of purchasing or renting your new home, expenses related to selling or breaking the lease of your old home. House-hunting costs are not deductible and you can only deduct the lodging at your old location for a day if you were forced to stay elsewhere because your furniture and other important household items had been moved.
Remember also that moving expenses are an adjustment to your income and not an itemized deduction. Since moving expenses which are tax deductible reduce your adjusted gross income, they may assist you to qualify for other tax benefits that are normally meant for higher income earners.
Legal disclaimer: The factual information in this article was taken from the Internal Revenue Services website on July 20016. Neighbors Moving & Storage of Seattle, LLC cannot be held liable for any changes in the tax code or the information stated above. For further and more in-depth information about tax deductions on a relocation, be sure to consult a certified public accountant.