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Taxes and Moving – Foothill Ranch Movers

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How to Deduct Your Moving Expenses

This time of year, our Foothill Ranch moving company often gets asked whether or not moving expenses are tax-deductible. The fact of the matter is that sometimes customers can deduct moving-related expenses on their federal income taxes. But in order to do this, you have to meet a variety of requirements, including the following:

Why You Move

The most important piece of this equation is the reason you’re moving. In order to claim moving expenses on your taxes, you have to move for work. If you’re transferred to a new location by your current company, get a new job, or move your business, you may qualify. Move for any other reason, and you don’t. But simply moving for work-related reasons isn’t enough. You’ll also have to meet the requirements of the following three tests in order to claim this deduction:

Time Before Move

First, you need to move within a reasonable amount of time of actually taking your new job or transferring jobs. Generally, this is determined to be 12 months from the date of taking your new job.

However, in certain circumstances, you can get away with moving over a year from when you take your job. You just have to delay your move for reasons that you can justify before the IRS. If there are family reasons for you to delay your move, like if you want to wait to move until your spouse retires from her job in your current home town. If you take more than a year to move, talk to a tax professional to see if your reasoning is justifiable.

Time in Job

The second time test has to do with how long you keep your job after you move. The official rule is that you need to stay in your job for 39 of the 52 weeks following your new job. You need to work full-time for this rule to apply. But you don’t have to stay with the same employer. In fact, if you move to a new job after you move your home, you’ll still qualify as long as the new job also meets the distance test.

Distance from Old Home

To meet the distance test, you need to do some math. Basically, the IRS says that your new job must be at least fifty miles further from your old home than your old job was. In other words, if your commute between your old home and your new job increased by at least fifty miles, you’ll pass this test.

The IRS requires that you use the shortest commonly-traveled route when making these calculations. Check out a mapping program to get exact distances if you’re cutting it close. Subtract the distance between your old home and your old job from the distance between your old home and your new job. If you come up with fifty or more, you’ll meet the distance test.

What Deductions are Allowed?

So if you pass all these tests, which expenses can you actually deduct from your federal income taxes? You’ll be able to deduct any expenses directly related to your move. This includes money paid to your Foothill Ranch moving company for your move. It also includes expenses like 30 days of self storage fees, if you need a storage unit for a short amount of time.

You can also claim mileage for your own family’s road trip if you drive your family vehicle(s) to your new home. The only expressly disallowed expense is the cost of any food you pay for on your road trip to your new home.

How to Claim the Deduction

Claiming this deduction is complex, so you’ll want to be sure that you consult with a tax professional if you decide to claim this expense on your taxes. It really can save you some money and reimburse some of what you pay for your move, but it’s risky to try to claim it without the help of a professional to navigate you through all the ins and outs of claiming the expense.