04 Oct Keep Track of Your Moving Expenses for Tax Savings
Learn how to track your moving expenses for tax savings here. Moving is not an enjoyable process, but most people have to do it sometime. If the move is related to your job, it might be possible for you to deduct reasonable moving expenses when filing your tax returns. It does not matter whether you are moving right now or have moved within a year of taking up a new job or on transfer. You may be able to deduct moving expenses even if you have not got a job prior to moving, or you do not start a job immediately after moving.
That said, you will be able to claim moving expenses, except the cost of meals, only if you satisfy the following conditions:
It must be closely related to your work
Distance test: The new workplace should be located a minimum of 50 miles away from your old home when compared to the distance between your old job and old home. If you were not employed earlier on or worked from home, the new workplace should be 50 miles away from the old home. The worksheet in IRS form 3903 will help you to clearly understand this aspect.
Time test: If you are employed, it is important that you work full-time for a minimum period of 39 weeks in the 12 months following your arrival to the new job location. In case you are a self-employed person, you should have worked full-time for a minimum period of 39 weeks in the 12 months and for 78 weeks in the 24 months following the move. Expenses for tax savings exceptions are as follows:
-You are transferred at employer’s request.
-You lose your job for other reasons and not willful misconduct.
-You become disabled.
-You satisfy the requirements for retirees or those for the survivors that live outside the United States of America.
-The move is because of a permanent station change as an armed forces employee.
-The tax returns form is filed on behalf of a person who is no more.
Expenses qualified for deduction are listed below, but those reimbursed by the employer cannot be claimed. Deductible expenses are:
-Travel costs
-Shipping and packing materials
-Utility fees, excluding late fees, reimbursable deposits, etc.¿
Tips for Tracking Moving Expenses
In order to include all the expenses in your deductions, it is important that you keep track of your expenditure. You need to follow a well-organized expense tracking system to make the whole process simple and easy.
The first step is identifying the expenses you need to keep track of. Then create a personal system for organizing and recording your expenses. You can make use of a variety of options that are available to record your expenses. You may file your receipts and note the amounts in a notebook or on a spreadsheet in your PC. You can also make use of expense tracking applications on your mobile device for the purpose. Some apps require you to enter the details by hand, while others work by allowing you to upload a scanned copy of your receipts.
Regardless of the tracking system you use, it makes sense keep a written account of the expenses. This will come in handy if the IRS asks for verification or additional proof.
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