Interested in learning on how to get a tax break on moving expenses? In some instances, it is possible for you to get a tax deduction for the expenses associated with moving when you file your federal income tax. If you are not familiar with the procedures or rules for claiming your move on your taxes, then you should consult your accountant for the full details. But as far as getting a general idea of if and what you can claim when it comes to moving expenses, our San Diego local moving company, Move Central, Inc. is going to provide that information to you in this article.
How to Get a Tax Break on Moving Expenses
Determine If You Qualify
In the case that you are moving to a new area because you have gotten a new job or are transferring within your current company to a new location, you can deduct your moving expenses by making an adjustment to your gross income. The following conditions must apply:
- Your new job location requires more than a 50 mile drive (one way)from where you currently live, based on the most direct and common routes.
- You are moving within 365 days of your start date at the new workplace.
- You will work at least 39 weeks out of a 12 month period in the new area after the move and are considered a full time employee. In the case that you are self-employed, you must work full time for 78 weeks during the 24 month period after you move.
- Different rules may be applicable to those in the military, those who have retired from the military, and their survivors living outside of the U.S.
Go to IRS.gov for full details on the qualifications.
If you qualify for getting a deduction on your moving expenses, you may deduct the following if your move was within the U.S. or if you moved from another country to the U.S. or its territories.
Packing & Transportation Expenses
The reasonable expenses associate with the packing, crating, and transportation of your belongings from one home to the next can be deducted. This can include transporting your vehicle or pet and any in-transit storage. When moving inside the U.S., in-transit storage deductions for the expenses for thirty successive storage days from the time your items are moved. To find out the guidelines about reasonable expenses, go to IRS.gov.
The expenses associated with your travel and lodging can be deducted. This includes travel expenses for only the most direct route depending on your mode of transportation. You and your family can travel at separate times if needed, but only one one-way trip for each person can be deducted.
Expenses For The Self-Employed
Any of the previously mentioned expenses can be deducted if you own your own business and are considered self-employed, as long as you are relocating your business as well. For the self-employed, there is no limit to the deduction available for moving personal belongings and travel expenses.
Expenses That Are Not Deductible
- Trips to find a new home
- Deposits lost
- Deposits required
- Lost membership dues
- Temporary housing
- Fees, costs, or losses for buying, selling or leasing a home
- House repair or improvement
- Drivers licenses or tags
- Penalties on early mortgage payments
- Real estate tax (though these can be claimed as itemized deductions)
How Are Moving Expenses Reported?
Moving expenses are deducted as adjustments to your gross income. In most cases, you should use the moving expenses form 3903 from the IRS to list your moving expenses and their amounts. There may be special cases where another form is necessary, so you should always contact your tax preparer or the IRS website to find out which for is appropriate for your situation.
Tax Implications For Reimbursements
If your employer has reimbursed you for your expenses, there will be tax implications. These can be discussed with your tax preparer or your employer.
Discuss Your Moving Expenses With Your Accountant
Though we are here to help you in any way we can, our moving company in San Diego is not a legal tax advisor and cannot give tax advice for your specific situation. The advice given here should be used only as a guideline, and you should always talk with your tax advisor or the IRS to get advice on your taxes.
Here are just a few more things to remember when claiming your moving expenses on your taxes:
- Save all of your receipts for your moving expenses, including those for hotel rooms, plane tickets, gas, cabs, as well as the bill of lading and additional services receipt from your moving company. All of these will be necessary for proving your expenses and claiming them as a tax deduction.
- It is good to consider ahead of time how your moving expenses might affect your tax liability. If you were reimbursed for any moving expenses that cannot be deducted on your taxes, these could be taxable. In this case, you would need to put aside the extra money to pay your taxes or start having additional money withheld by changing your W-4 form. Again, your accountant is the best person to help you make these decisions.
- In the case that you have sold your home, you will need to put this information on Schedule D when filing your taxes. Publication 523 from the IRS can help you in correctly filling out of this form. Additionally, Publication 521 from the IRS can help you to fill out form 3903 to claim your moving expenses.
- – To request any federal tax form or publication, you may call your local IRS office, dial toll free at 1-800-829-3676 or go to IRS.gov. For additional help or inquiries, you can call the IRS helpline at 1-800-829-1040.
- At the beginning of each new tax season, the Internal Revenue Service releases its annual Highlights of Tax Changes booklet, also referred to as publication 553. This booklet can be helpful in determining what changes may have been made to the deductions allowed for moving expenses.
- Since there are special allowances for members of the military or civilians moving outside of the U.S., if either of these situations applies to your case, you should contact your tax preparer for more information on how to quality and claim the expenses associated with your move.
We hope that this article has helped you to gain a better understanding of your tax exemptions for moving. Even though our San Diego moving service, Move Central, Inc., is not able to give you legal advice for your move, we want to help you in any way we can to make your move easier and better.