Moving can be expensive. Recent surveys have shown that long-distance moves can cost anywhere between $9,000 and $12,000! Thankfully, Uncle Sam has your back regarding reducing the cost of your move by listing the possible tax-deductible items.
Basic Eligibility Requirements
While you can deduct most of the expenses related to your move, you’ll need to meet specific eligibility requirements. These are detailed in IRS Publication 521 (Moving Expenses).
- A change in your job or business location must necessitate your move.
- Your new site must be at least 50 miles further from your previous home than your previous employer’s location.
- You must work as a full-time employee for at least 39 weeks during the first year following your move.
- If you are a business owner, you must work full-time for at least 39 weeks during the first year following the move and for 78 weeks during the first two years.
- Military personnel is not required to meet the time or distance tests to qualify for tax deductions associated with moving.
Most of that can be very vague, as most communication originates from the IRS.
Example of a Move That Qualifies for Tax Deductions
If your current employer is 35 miles from your home, you’ll need to move at least 85 miles away to be eligible for tax deductions. That’s because you have to move at least 50 miles farther than the distance from your old home to your old job.
Example of a Move That Doesn’t Qualify for Tax Deductible Items
If you’re currently driving 35 miles to work, and your employer moves his office location to 85 miles in the opposite direction, you won’t be eligible for tax deductions if you move. That’s because the total increase in distance traveled is only 50 miles – and you’ll need to move at least 50 miles plus the actual distance to your office to qualify for the move.
What Can You Deduct?
You can deduct virtually everything associated with your move with few limitations. Deductible items include:
- Utility connection and disconnection fees
- Actual moving costs (renting a truck or hiring a moving company)
- Some storage fees
- Some insurance costs
- Some lodging expenses
- Limited travel expenses
- Shipping costs for your vehicle
Further Considerations for a Tax-Deductible Move
If you’re married and filing jointly, only one spouse must meet the time and distance requirements to deduct your moving expenses. If your employer is kind enough to provide even a partial reimbursement for the moving expenses, you can’t double-dip – you’ll only be able to claim the costs out of your pocket.
Finally, if you deduct your moving expenses but fail to meet the time requirements, you’ll need to amend your future tax returns.
The best way to ensure that your moving expenses are properly deducted is by working with an accountant who can maximize your deductions and save you a ton of money.
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Image from PEXELS.