Moving Tax Deductions

Your Taxes: What Moving Expenses Can You Claim

One of the best things about moving to a new place is the fact that it may actually save you some money on your taxes. In order to help those who are moving for a new job, the IRS grants a special moving tax deduction for people who meet certain criteria. Knowing if you can take this deduction is fairly easy, and once you know you can, you can deduct a wide array of moving related expenses. Want to know more? Read on and see if you qualify to deduct your relocation related costs from your income this year.

The Two Tests

There are two tests that the IRS says you must satisfy in order to qualify for the moving tax deduction. They are as follows:

  • The Distance Test: The distance test is a guideline of how far you must move in order to qualify for this deduction. According to the rules, your new place of employment must be, at the very least, fifty miles farther away from your old house than your old place of employment was from that same home. If you did not have a previous place of employment, then the new place must be fifty miles from your old place.
  • The Time Test: The time test is the guideline stating how long you have to work after moving in order to qualify for the moving tax deduction. According to this test, the IRS requires you to work at least thirty-nine weeks out of the first year following your move. This clock starts on the day you move in. If you are self employed, you must meet this initial aspect of the test, as well as work a total of 78 weeks during the first two years following your move.
  • An Important Note: If you are moving because of a military change of orders, or a change of station, satisfying these tests is not a requirement.

What Can Be Deducted

Now that you know you qualify for the moving tax deduction, it’s time to look at what you can actually deduct. The IRS has a list of costs that can be included, as well as a long list of things that cannot. Be sure to group your expenses into these two categories ahead of time so that you can file easily and without trouble.

Deductible Expenses: As of 2013, you are limited to deducting the following:

  1.    Moving company costs
  2.    Packing costs and supply expenses
  3.    Moving insurance
  4.    Costs associated with one trip to your new home, including hotels but not food
  5.    24 cents per mile for the drive to your new home
  6.    Costs associated with disconnecting utilities at your old place and connecting them at your new one
  7.    Up to 30 days of storage for your belongings

Non-Allowed Expenses: 2013 saw a rise in how many things were disallowed by the IRS as well. You cannot deduct the following:

  1.    Costs associated with the purchase or sale of a home
  2.    Lease related expenses, such as broken lease fees
  3.    Security deposits
  4.    Losses from club memberships and similar fees
  5.    Fees and costs associated with getting a new drivers license and registration
  6.    House hunting expenses

Other Considerations

Often, if you are moving for a job, your employer might be paying for some or all of the costs associated with this. If this is the case, then you need to consider what kind of payment you are getting. Generally, employers offer one of the following:

  • Tax-Free Riembursement: If your employer gives you money to pay for the move equal to what you would have been able to deduct from your taxes, then you don’t have to do anything special that year. You are not able to claim the deduction either.
  • Adding to Your Salary: In some cases, the employer will add the amount to your salary. In this case, you’ll have to fill out the forms to take the moving tax deduction. This is also how you would handle things if you are self employed.
  • Important Note: Remember, if your employer gives you more than what the IRS lets you deduct, the overage will count as income and will be taxed as such.

Now that you know what’s involved with the process of claiming the moving tax deduction, you can easily move into tax season and get as much back as possible. Moving isn’t quite so expensive if you know you can deduct a large chunk of it. For that reason, keep these things in mind so that you can recoup as much of your moving costs as possible when you’re moving because of a new job.

About Alyssa Sullivan

Alyssa Sullivan is a moving and storage veteran and a relocation consultant of Moving Angels , a one stop shop specializing in long distance and local moves within US and Canada, auto transport and homeowners insurance.
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