Moving This Summer? Here are 10 Helpful Tax Tips
During these changing economic
times, a change of scene can sometimes put us back on the path to
success. Many families are moving to take advantage of better
opportunities, whether across town or across the country.
If you're relocating to start a new job - or even for the same
job at a new location, you might find that moving bill isn't the
big problem you anticipated. All you have to do is meet some
criteria the IRS has, and you might be able to cut that moving bill
down to size, courtesy of Uncle Sam.
Basically, there are 10 items on your checklist:
1. Expenses must be close to the time
you start work - Generally, you can consider moving expenses
that you incurred within one year of the date when you first report
to work at a new job location.
2. Distance Test - Your move
meets the distance test if your new main job location is at least
50 miles farther from your
former home than your previous main job location was from your
former home. For example, if your old main job location was
three miles from your former home, your new main job location must
be at least 53 miles from that former home.
3. Time Test -
Upon arriving in the general area of your new job location, you
must work full time for at least 39 weeks during
the first year at your new job location. Self-employed individuals
must meet this test, and they must also work full time for a total
of at least 78 weeks during the first 24 months upon arriving in
the general area of their new job location. If your income tax
return is due before you have satisfied this requirement, you can
still deduct your allowable moving expenses if you expect
to meet the time test. There are some special rules and exceptions
to these general rules, so see Publication 521, Moving Expenses, for more
information.
4. Travel - You can deduct
lodging expenses (but not meals) for yourself and household members
while moving from your former home to your new home. You can also
deduct transportation expenses, including airfare, vehicle mileage,
parking fees and tolls you pay, but you can only deduct one trip
per person.
5. Household Goods
- You can deduct the cost of packing, crating and
transporting your household goods and personal property,
including the cost of shipping household pets. You may be able to
include the cost of storing and insuring these items while in
transit.
6. Power up -
You can deduct the costs of connecting or disconnecting
utilities.
7. Nondeductible Expenses - You
cannot deduct as moving expenses: any part of the purchase price of
your new home, car tags, a driver's license renewal, costs of
buying or selling a home, expenses of entering into or breaking a
lease, or security deposits and storage charges, except those
incurred in transit and for foreign moves.
8. Form - You can deduct only
those expenses that are reasonable for the circumstances of your
move. To figure the amount of your deduction for moving expenses,
use Form 3903, Moving Expenses.
9. Reimbursed Expenses - If
your employer reimburses you for the costs of a move for which you
took a deduction, the
reimbursement may have to be included as income on your tax
return.
10. Update Your Address
- When you move, be sure to update your address
with the IRS and the U.S. Postal Service to ensure you receive mail
from the IRS. Use Form 8822, Change of Address, to notify the
IRS.
Still have questions about moving expenses? More details are
available in IRS Publication 521 and Form 3903. IRS publications and forms are
available on www.IRS.gov or by calling 800-829-3676.