Making the decision to move can be emotional and difficult on many levels. On the one hand you are going to be separated from friends and possibly family. Not to mention starting over with building a new life and home. However, there are many cases where this can be a financially rewarding decision. If moving for reasons of employment, it may be possible to actually deduct some or all of your moving expenses from your year-end taxes.
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Basic Eligibility Factors:
The first thing you need to consider is whether or not your type of move would even qualify for tax deductions. The IRS does have a number of specific rules and conditions, including:
- Moving at least 50 miles: This is determined by the location of your new home in comparison to your old home.
- The move is timed closely to the start of your work: All of your deductible moving expense must have been incurred no more than one year after you begun your new work, or rather working in your new location.
- Pass the required time test: This time test states that you must be employed and working full time with the company for at least nine months during the one year period immediately following your move and arrival to your new location. Military members who are moving as the result of new orders or changes in there duty assignments do not have this as a requirement.
Types of Potentially Deductible Expenses:
In many cases, your employer might actually offer a relocation package, or RELO. While this should be a big help in terms of deferring a number of the major moving expenses likely to be incurred, there are also a number of others that can be deductible, such as:
- Transportation costs such as truck rental fees and moving company charges.
- Tolls and parking expenses while transporting yourself and family via personal vehicle(s).
- Packing costs, including both labor and supplies.
- Fuel and storage costs including expenses for transporting vehicles.
- Connecting and disconnecting utilities in either location.
- Shipping and service fees to transport pets.
- Lodging costs and other incidental transportation expenses.
Since we are dealing with the IRS here, it is always important to keep all receipts.
Items That May Not Be Deductible:
The IRS does provide guidance on some expenses that may not be deductible on your tax returns, including:
- Price of the new home.
- Losses associated with the sale of your old home.
- Moving expenses and fees connected to any items purchased during the actual move.
- Driver’s license fees and anything associated with car plates or registration.
Which Form Is Needed?
In order to take any of the deductions listed above, remember to file Form 3903. Keep all receipts and your bill of lading along with any other logs or relevant information to substantiate your deductions.
For more tips and tricks on how to make your move as smooth and stress free as possible see our MOVING RESOURCES and guides TODAY!
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