COULD YOU WRITE OFF YOUR MOVING EXPENSES?

You may be able to take your moving expenses as a tax deduction. While government regulations have tightened up in recent years, there are still opportunities to catch a break on your taxes if you meet certain criteria. Understanding these requirements can help you determine whether your move qualifies for tax benefits and how to maximize your deductions.

 

 

To claim moving expenses, your situation needs to align with one or more of the following qualifications:

 

1. Your new job or job transfer is at least 50 miles farther from your home than the old house was. This rule ensures that the move is directly related to your employment and not just a lifestyle choice.
2. If you had no previous job, the new one has to be at least 50 miles from your old house. This applies to first-time job seekers or those re-entering the workforce.
3. Your move must make your commute shorter than it was before the move—not longer. This demonstrates that the move improves your access to your new place of employment.
4. If you are in the armed forces and had a permanent change of station. Members of the military have unique rules that make them eligible for deductions even under circumstances where civilians might not qualify.
5. If you’re working full-time (you expect to work at least 39 weeks out of the next 12 months), even if self-employed. For the self-employed, you also need to work at least 78 weeks in the first two years at your new location.
6. If you incur expenses within one year from the day you reported to work at your new job. This keeps the tax benefit tied closely to the timing of the move.

The required length of time is waived in certain cases. These exceptions include members of the armed forces, individuals transferred by an employer, those who lost a job through no fault of their own, and those returning to the United States from abroad due to retirement or as survivors of a deceased taxpayer.

 

Instead of being lumped into itemized deductions, these expenses are deducted directly from your adjusted gross income (AGI). This adjustment means you may still take the standard deduction if it benefits you more.

 

If you meet the criteria, you can deduct specific costs associated with your move. These include:

 

• Packing and transporting household goods: This includes professional moving services or expenses for a DIY move, such as renting a truck.
• Mileage for use of your car (or gas and oil expenses): The IRS provides a standard mileage rate for moving purposes.
• Tolls and parking fees on the trip: Any road-related expenses incurred during the move.
• Up to 30 days’ storage of household goods: This applies to temporary storage required during the relocation.
• Disconnecting and reconnecting utilities: This includes setting up basic services like electricity, water, and internet.
• Transportation and lodging for yourself and members of your household while traveling to the new home: Meals are not deductible, but reasonable lodging is.

Certain moving-related expenses are no longer deductible under current tax laws:

 

• Temporary living expenses for up to 30 days, capped at $3,000.
• House hunting trips before the move.
• Costs associated with selling your old home and purchasing a new one.

For most taxpayers, moving expenses are deductible in the year they are paid, even if the expenses were incurred earlier. This means careful record-keeping is essential to claim your deductions accurately.

 

If your employer covers your moving expenses, qualified payments are excluded from your taxable income and noted with a code “P” in box 12 of your W-2. However, be cautious: if your employer pays for non-qualified expenses, such as house hunting or temporary living costs, those amounts are taxable. They should be included in Box 1 of your W-2 as income. Regardless of whether your employer properly reports them, you’re responsible for including these amounts in your taxable income.

 

To claim your moving expenses, you’ll need to use the long Form 1040. These costs are reported on Form 3903, which is then transferred to line 27 of your return. The good news? You don’t need to itemize other deductions, meet income thresholds, or worry about deduction phase-outs to take advantage of this tax break.

 

While the rules for deducting moving expenses have tightened over the years, the potential savings can make the effort worthwhile. Ensure that your expenses meet the criteria, and keep detailed records to substantiate your claim. If you’re unsure, consulting a tax professional can help you navigate the specifics and maximize your deduction

 

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