You Can Write Off Your Moving Expenses

As we know, moving can be a stressful and costly experience. Fortunately, there is a tax deduction available for those who are eligible. Knowing what expenses can be written off can help reduce the financial burden of a move. In this article, we'll explain how to qualify for the deduction and outline the types of expenses that can be deducted.

Qualifying for the Deduction

Qualifying for deduction must fall on these requirements:

• The transfer must pass both the distance test and the time test in order to qualify for the moving cost exemption. The new workplace must be at least 50 miles farther away from your previous residence than your old workplace in order to pass the distance test. You must fulfill the time test's requirements by working full-time for at least 39 weeks in the first year after moving near your new place of employment.
• The deduction is subject to job conditions as well. The relocation must coincide closely with the commencement of employment at a new place. If you're self-employed, you have to put in at least 78 weeks of full-time labor within the first 24 months of moving into the approximate vicinity of your new place of business.
• Military personnel and their dependents are also eligible for the deduction, even if they don't meet the distance and time tests.

Types of Deductible Expenses

There are several types of expenses that can be deducted when moving for work. These include:

Transportation and Storage Costs

The expense of relocating your possessions can be written off from your old home to your new home. This includes the cost of packing, crating, and shipping household goods and personal property. You may also write off the expense of keeping your belongings for up to 30 days after your move.

Travel Expenses

The cost of flying from your former house to your new home is deductible. This includes the cost of transportation, lodging, and meals. You can also deduct the cost of traveling to your new workplace to look for a new job.

Utility Services and Fees

You can deduct the cost of connecting or disconnecting utilities related to your moves, such as gas, water, and electricity. You can also deduct the cost of fees for transferring your phone, cable, or internet service.

Other Deductible Expenses

There are several other expenses that can be deducted when moving for work. These include the cost of shipping your car, the cost of transporting your pets, and the cost of storing and insuring valuable items during the move.

Before we dive into how to claim the deduction, it's essential to understand which expenses are non-deductible. The following expenses cannot be claimed as deductions:

1. Non-work-related expenses: Expenses that are not related to your job are not eligible for tax deductions. For example, if you move to a new city to be closer to your family, those expenses cannot be claimed as deductions.
2. Expenses reimbursed by your employer: If your employer reimburses you for moving expenses, you cannot claim them as deductions.
3. Expenses for a vacation home: If you move to a vacation home, those expenses cannot be claimed as deductions.
4. Expenses for storage: Expenses for storage of your personal belongings are not deductible unless they are incurred in transit and for a period of 30 days or less.

How to Claim the Deduction

Now that you know which expenses are non-deductible, let's dive into how to claim the deduction. To claim the deduction, you must meet the following requirements:

• The 50-mile rule states that your new job must be located at least 50 miles away from your previous one.
• The time test: You must work full-time in the general vicinity of your new job location for at least 39 weeks during the 12 months following your move. If you are self-employed, you must work full-time for at least 78 weeks during the 24 months following your move, with at least 39 of those weeks occurring in the first 12 months.
• Notification to the employer: If you are an employee, you must notify your employer that you are moving and provide them with your new address.
• Distance and time requirements for self-employed individuals: If you are self-employed, you must meet the distance and time requirements as if you were an employee. Additionally, you must also meet two additional requirements:
• You must work in the same trade or business for at least 78 weeks during the 24 months following your move.
• Your self-employment income in the location of your new workplace must be at least 75% of your total self-employment income for the 24-month period following your move.

Filing Requirements

To claim the deduction, you must file Form 3903, Moving Expenses, with your tax return. Even if you don't itemize your taxes, you can still claim this benefit. You can also deduct moving expenses incurred by your spouse and dependents as long as they meet the distance and time requirements.

Supporting Documentation Needed

To support your claim for moving expenses, you should keep the following documents:

1. Keep all receipts for relevant expenditures to your move, including receipts for packing, crating, and shipping your household goods and personal effects.
2. Bill of lading: If you use a moving company, you should have a bill of lading that shows the weight and value of your goods.
3. Travel expenses: Keep receipts for expenses related to travel, including lodging and transportation.
4. Records of time and distance: Keep a record of the distance you move and the time you spend working in the general vicinity of your new job location.

Conclusion

In conclusion, it is possible to write off your moving expenses on your taxes under certain circumstances. To qualify for this deduction, you must meet the IRS's requirements, including the distance test and the time test. Additionally, the expenses must be related to starting a new job or business in a new location. It is important to keep thorough documentation of all your expenses and consult with a tax professional to ensure you are following all the rules and regulations. By taking advantage of this deduction, you can potentially reduce your tax liability and save money.