WHEN ARE MOVING EXPENSES TAX DEDUCTIBLE?

Are you planning a move? Whether it's for a new job, a change of residence, or other reasons, moving can be both exciting and stressful. What you might not realize is that some of your moving expenses could be tax deductible, potentially saving you money. In this guide, we'll explore the ins and outs of tax-deductible moving expenses, helping you understand when you can qualify for these deductions.

Understanding Tax-Deductible Moving Expenses

Before we dive into the specifics, it's essential to know what moving expenses are eligible for tax deductions. Generally, to qualify for a deduction, your move must meet the following criteria:

• • Distance Test: Your new job location must significantly increase your commute. In most cases, your new workplace should be at least 50 miles farther from your old home than your previous job location.
  • Time Test: After you move, you need to work full-time for a minimum number of weeks during the first year. The precise duration can vary, but it's usually around 39 weeks.

If your move meets these criteria, you might be eligible for tax deductions on your moving expenses. Let's break down which expenses qualify:

Eligible Moving Expenses

Transportation Costs
This includes expenses related to transporting your household goods and personal belongings. Costs for packing, crating, and shipping fall under this category.

Travel Expenses
You can deduct the costs of lodging during the trip, but not meals. If you drove to your new location, you can also claim a standard mileage rate.

Storage Costs
If you need to store your belongings before moving them to your new home, those costs can be tax deductible.

Utility Connection/Disconnection Fees
Fees related to connecting or disconnecting utilities like water, gas, or electricity can be included.

Special Needs
If you have to move certain items that require special handling, such as a piano or art collection, the additional costs for their transportation could be deductible.

Common Questions

What if my employer reimburses me for my moving expenses? Can I still claim deductions?
Yes, you can. If your employer reimburses your moving expenses and includes them in your income, you can still claim deductions. However, you cannot deduct the expenses your employer reimburses.

Are there any time constraints for claiming these deductions?
You typically need to claim your moving expense deductions in the tax year when your move occurred. Keep the records, receipts, and documentation in case the IRS requires verification.

Can self-employed individuals claim moving expense deductions?
Yes, self-employed individuals can claim these deductions, but the distance and time tests still apply.

Can I deduct expenses for my spouse and dependents?
Yes, you can include the moving expenses for your spouse and dependents if they meet the distance and time tests. The IRS treats their move as if they had paid the expenses themselves.

What if I don't meet the distance or time tests?
If you don't meet these tests, your moving expenses are not tax deductible. Be sure to check IRS guidelines or consult a tax professional for guidance specific to your situation.

Connect with Liberty Tax

Ready to make your moving expenses work for you? Discover how you can turn your moving costs into tax deductions. Connect with Liberty Tax Services to maximize your savings. Contact us for expert guidance on deducting your moving expenses.