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Moving Expenses are Tax
Deductible if you meet the
IRS Requirements!
Moving expenses that are
deductible include traveling costs,
lodging expenses, cost of packing, cost of transporting your
car as well as other expenses
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If you move to a new "principal place of
work" during the year you
may be able to deduct your moving expenses. These moving expenses
are "reasonable expenses" of moving your "household goods and
personal effects" from your former residence to your new
residence.
You may deduct un-reimbursed expenses of moving your
household goods and traveling to a new job locations if you meet
the IRS requirements.
Requirements for Moving Expenses
- Your move is closely
related to the start of work -
Your move must be closely related, both in time and place,
to the start of work at your new job location. Essentially, you
need to move within a year of starting your new job. If you
do not move within 1 year of the date you begin work, you
ordinarily cannot deduct the expenses unless you can show
that "circumstances" existed that prevented the move
within that time.
An example of a special "circumstance" could be that
delayed your move in order to let your child complete high
school.
- You meet the distance test
- The distance between
your new job location and former home must be at least 50
miles more than the distance between your old job location
and your former home. Thus, if your former job was 15 miles
from your former residence and your new job is more than
65 miles from your former residence you will qualify for the
moving expense deduction.
To see more examples of the "Moving Distance Test", click here.
- You meet the time test -
If you are full time employee,
you must work full time for at least 39 weeks during the first
12 months immediately after you arrive in the general area
of your new job location. If you are self-employed, you
must work full time for at least 39 weeks during the first 12
months and for a total of at least 78 weeks during the first
24 months after your arrive in the general area of your new
job location.
You can ignore the "time test" if :
- You are in the armed
forces and moved because of
a permanent change of station.
- Your job at the new
location ends because of death
or disability.
- You are transferred for
your employer's benefit or
laid off for a reason other than willful misconduct.
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Deductible Moving Expenses
If you meet the requirements you may deduct the
following
expenses
- Traveling costs from
the old home to the new home. If
you use your own car, you may either deduct the actual
cost of gas, oil, and repairs during the trip or take a
deduction based on the rate of 15 cents per mile.
- Lodging expenses
- The cost of packing,
crating, and transporting
furniture and household belongings from your old home to
your new home.
- The cost of storing and
insuring your household
goods for up to 30 consecutive days during the move.
- The cost of transporting your
car or moving your pet to
your new residence.
- The cost of connecting or
disconnecting utilities when
moving household appliances.
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There is no dollar limit on the
amount of expenses but they must
be "reasonable". You must also move by the shortest, direct route
available in the shortest time required to travel between your old
home and new home. So if you are planning to move from
Washington to California, you can't take a side trip to Hawaii.
Standard Mileage Rate
The standard mileage rate for moving expenses for 2007 has been
increased to 20 cents a mile.
Non Deductible Moving Expenses
The following expenses are note deductible:
- Meal Expenses
- Temporary living expenses
- Real estate taxes
- House hunting expenses
- Expenses incurred in the
buying or selling of your new
home.
- The cost of connecting a
telephone in your new home.
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Nondeductible Moving Expenses
- Any part of the purchase
price of your new home.
- Car tags.
- Driver's license.
- Expenses of buying or
selling home (including closing
costs, mortgage fees, and points).
- Expenses of entering
into or breaking a lease.
- Home improvements to
help sell your home.
- Loss on the sale of your
home.
- Losses from disposing of
memberships in clubs.
- Mortgage penalties.
- Pre-moving house hunting
expenses.
- Real estate taxes.
- Refitting of carpet and
draperies.
- Return trips to your
former residence.
- Security deposits
(including any given up due to
the move).
- Storage charges except
those incurred in transit and
foreign moves.
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No Double Deduction
You cannot take a moving expense deduction and a business expense
deduction for the same expenses. You must decide if your expenses are
deductible as moving expenses or as business expenses. For example,
expenses you have for travel, meals, and lodging while temporarily working
at a place away from your regular place of work may be deductible as
business expenses if you are considered away from home on business.
Generally, your work at a single location is considered temporary if it is
realistically expected to last (and does in fact last) for one year or less.
Claiming Deductions Prematurely
If the due date for filing your tax return arrives
before you can
satisfy the 39 week test, you may still deduct un-reimbursed moving
expenses. If you subsequently fail to meet the time test
requirement you will have to file an amended return to eliminate the
deduction or report income.
Reimbursements
If your employer reimbursed you for your moving
expenses, or if
your employer pays for them directly, you don't have to include
your reimbursements or payments in your income. Moving
expenses that your employer pays to a third party, a moving
company, for example, are not reported as income either.
Reimbursements for expenses that do not qualify for a deduction,
meal expenses for example, should be reported as income.
Click here to leave moving
expenses and return to
miscellaneous tax breaks main
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