Deducting Your Moving Expenses

It’s not uncommon for people to wonder if their moving related expenses are tax-deductible, like so many other random expenses in life. In fact, moving-related expenses, including those that you pay to Fountain Valley movers. However, the rules behind this deduction get complicated, so it’s important to understand them before you decide to claim this tax deduction.

Why You Move

The biggest piece of this puzzle is why you move. You can only claim your moving related expenses as a tax deduction if you move for job-related purposes. If you get a new job, get transferred, or move your business, and then move as a consequence, you might be able to deduct your moving-related expenses from your federal income taxes. Of course, though, things aren’t quite as simple as all that. You’ll need to meet the following tests to qualify.

Time Before Move

The first rule here is that your move needs to be clearly linked to your new job. Generally, you need to have moved within 12 months of your job relocation to qualify. Otherwise, your move isn’t considered linked to your job, so you don’t qualify for this deduction.

In certain circumstances, though, you can justify this delay if you delayed for a good reason. So if, for example, you stay in your current home because you want your child to be able to graduate from their current high school before you move, that’s likely a justifiable reason. You’ll need to check with a tax professional, though, to determine whether or not your reason is justifiable.

Time in Job

The second part of the time test has to do with how long you stay in your job after your move. You can’t take a new job, move, and then retire a month later and still claim this tax deduction. To meet this requirement, you have to work full-time at your new job–or at least at a job that still meets the distance test–for 39 of the 52 weeks following your move.

You can actually take this tax deduction before you hit that 39 week minimum. But you’ll need to check that you fulfilled the whole test when you file the next year’s taxes. If not, you’ll need to pay back the money you saved because of this tax deduction.

Distance from Old Home

In order to meet the distance test, you’ll have to add at least fifty miles to your commute when you take your new job or get transferred. The official language says that your new job must be at least fifty miles further from your old home than your old job was.

The IRS requires that you use the most commonly-used, shortest route when calculating these distances. If your new job is well over fifty miles from your old job, you may be able to skip these calculations. But if you’re cutting it closer, you may need to make these calculations based on mapping software, just to ensure that you do, in fact, meet the distance test.

What Can Be Deducted?

If you pass all these tests, which expenses from your move can you deduct from your taxes? Actually, the rules on this are fairly broad. You can deduct any expenses directly related to your move, including money paid to your Fountain Valley moving company. You can also deduct personal expenses related to the move, including up to 30 days of a storage unit if necessary.

Other deductions include mileage when you move your family’s vehicles to your new home. You can also choose to deduct the cost of gas and maintenance, though claiming mileage is usually a better option.

How to Claim the Deduction

As this is a complicated tax deduction, it’s important to consult with a professional to confirm that you meet all the requirements to even take the deduction. Then, it’s a good idea to have the professional fill out the paperwork for your taxes, as well. Of course, you’ll need to be sure you keep all your moving-related receipts if you think you will qualify for this tax deduction.