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Moving Expense Deductions – Balboa

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Deduct Your Moving Expenses on Your Taxes

Did you get a new job this year and move because of it? If so, you might qualify to deduct the money you spent on your move from your federal taxes. This could include any money paid for boxes and other packing materials, as well as anything you pay to your Balboa moving company for their services. This is a somewhat complicated tax deduction, though, so be sure you understand it before you decide to claim it.

The Basics

 The only way you can claim this deduction is if you specifically move for job-related reasons. Whether you’ve been transferred by your current employer or have picked up a new job far from your current home, you may qualify for this deduction. In order to find out, you have to check these two “tests.”

The Time Test

The first test you’ll need to meet is the time test, which has two parts. You’ll need to meet both parts of the test eventually, but you actually only have to meet part A before you can claim the deduction. We’ll talk about that below.

Part A of the time test says that you need to move for your new job within 12 months of taking the job. This is generally, but not always the case. If you have a justifiable reason for waiting more than a year to move closer to your new job, you may be able to claim the credit, anyway.

What counts as a justifiable reason? It really depends. If you have questions about your reasoning, talk with a tax professional.

Part B of the test has two parts in and of itself. To meet this test, you’ll need to work at your job full-time for 39 of the 52 weeks after you start your job. You can actually claim the deduction before you technically meet this test, if, for instance, you take a new job near the end of the year. You will just have to pay back the deduction amount if you no longer meet the test by the time you file the next year’s taxes.

The Distance Test

This test is an even more confusing one, if that’s possible. The IRS says that in order to meet the distance test, your new job must be at least 50 miles further from your home than your old job was. In other words, your commute needs to increase by at least 50 miles for you to qualify for this deduction.

The IRS says that you have to use the shortest commonly-traveled route between two points when calculating this distance. So check a mapping software to see how far, exactly, between your old home and your old job. Then, check that same information between your old home and your new job. Subtract the first from the second. If you come up with more than 50, you’ll qualify for the deduction.

Where your new home is located doesn’t factor into this. The IRS just assumes you’ll have moved closer to your new job, of course.

Allowable Deductions

So what can you deduct if you meet the qualifications of all these complicated tests? You can deduct nearly any moving-related expense. This includes anything you pay your Balboa moving company, as well as any expenses you pay for things like moving boxes and packaging materials. If your new home isn’t ready to move into right away, you can also deduct up to 30 days’ worth of self storage expenses. Also, if you’re moving a very long distance, you can deduct mileage for your vehicle as you drive to your new home.

The thing you cannot deduct is any food related to your move, whether that’s the pizza you buy your volunteer moving crew or the fast food meals you eat on your trip to your new home.

How to Claim the Deduction

This is a complicated deduction, and you want to be sure that you do it all correctly. This is why it’s important to consult with a tax professional before claiming this deduction. ust keep a detailed record of your moving-related expenses, and ask your Balboa moving company for an itemized invoice for tax purposes.