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Deducting Expenses – Coto De Caza Movers

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Deducting Your Moving Expenses

This time of year, it’s not unusual for Cota de Caza moving companies to get questions about the tax deductibility of moving related expenses. Sometimes, in fact, the cost of your moving services package may be tax deductible on your federal taxes. This isn’t always the case, though. This is actually quite a limited deduction, and you have to pass a couple of tests to know if you qualify.

The Basics

In order to claim this deduction, you have to pass two tests. But the basic point is that you move for work-related reasons, and that your new job or new location is quite far from your old home. As long as you moved because of your full-time job or business, you might meet the requirements for taking this tax deduction. Here are the two tests you need to pass in order to qualify.

Time Test

This is actually two tests rolled into one. First, you need to have moved within a reasonable amount of time of taking your new job or being transferred. Second, you need to stay at your job for a reasonable amount of time after you move.

To meet the first test, you generally need to have moved within 12 months of taking your new job or being transferred. You can sometimes get around this rule, though, if you delayed your move for a justifiable reason. If you delayed selling your family home and moving for good reasons–like allowing your child to graduate from high school–you may still qualify for this deduction. Consult with your tax professional to find out.

The second part of the time test is how long you’re at your new job, or at least in your new job location. The rules note that you have to work full-time at your job for 39 of the 52 weeks after you move. You don’t actually have to stay at the same job, though. If you change jobs, as long as your new job meets the distance test, too, you’ll still qualify.

Because it takes such a long time to qualify for this part of the test, you can actually claim this deduction before you technically qualify. Just keep in mind that if you later change to a job that doesn’t meet the distance test, you’ll have to pay back what you saved because of this deduction in the next tax year.

Distance Test

This test lets you know whether or not your new job is far enough from your home to qualify for the moving expenses deduction. The IRS says that your new job must be at least 50 miles further from your home than your old job was. Basically, your commute needs to increase by at least 50 miles for this deduction to work for you.

To figure out distances for this test, the IRS requires that you use the shortest commonly-traveled route. In other words, if the shortest route, mileage-wise, goes off the beaten path, you don’t have to follow that one. But you’ll need to use reasonable commuting routes.

Measure the distance between your old home and your old job with a mapping program. Then do the same for your old home and your new job. Subtract the first from the second. If the difference is 50 or greater, you can qualify for this deduction.

Allowed Deductions

So which expenses can you deduct if you do, in fact, qualify for this deduction? Basically anything related to your move counts. This includes any money paid to your Coto de Caza moving company, as well as any funds you personally spend on your move. You can even claim self storage fees for up to 30 days if you need to, or claim mileage when you move your car to your new home.

The one thing you can’t claim is any food-related expense. Buy your movers pizza, if you’d like, but you can’t claim that expense on your federal taxes. Nor can you claim road trip related food expenses for you and your family members on moving day.

How to Claim the Deduction

This is a complicated deduction to claim, so it’s best if you consult with a tax professional before claiming this deduction.