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What You Should Know About Your Moving Expenses

With the end of the year quickly approaching, individuals may looking to relocate for a new job. Be sure to keep up with all those receipts, because the cost of moving may be deductible on your tax return. The IRS will let you deduct your moving expenses so long as you meet two basic “tests”: distance and time.

The distance test is simple. If you move for a new job, or even to find a new job, the new location must be at least 50 miles farther than the distance of your old commute. If you used to commute 10 miles to work, then the new location must be at least 60 miles from your old home. If you are self-employed and work from home, then you only have to move 50 miles away.

The time test is also simple. Once you move, you must be employed full time for at least 39 weeks of the next 12 months. What’s even better about this test is that you don’t have to work for the same company that brought you to the new location. Even if you quit that job, you can still deduct the moving expenses if you get another job in the same geographic area that keeps you employed full-time for the minimum of 39 weeks. If you are self-employed, the time rule is more strict. You must remain employed full time for at least 78 weeks of the next 24 months.

After you determine that you meet the two tests, you need to determine what moving costs are deductible. Here are some of the items that the IRS lets you deduct:

  • Travel expenses, including gas at $0.24 per mile, for one trip by the taxpayer and each member of the household. Household members do not have to travel together or at the same time.
  • Hotel rooms, but not meals
  • Costs of moving household goods
  • Up to 30 days of storage

Form 3903, Moving Expenses, is filed with your individual tax return to deduct the qualified moving expenses. What’s great about moving expenses is they are an “above the line” deduction, so you do not have to itemize your deductions in order to claim them. When it comes to tax planning, every taxpayer’s situation is difference. A Certified Public Accountant can help you evaluate your situation and determine which tax planning opportunities are applicable.

Submitted by Dennis Gallant, CPA, Senior Manager, Tax Services Department, Thomas Howell Ferguson P.A. CPAs, (850) 668-8100.

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