Individuals can take advantage of moving expense tax deductions, however here are some of the things you may need to show:
- You move within one year of accepting your new job.
- Your new job is at least 50 miles away from your previous home than your last job was from your previous home.
- Your new job is a full time position
- If you are self-employed, you may have to show some additional reasons why you had to move.
If you qualify, then you are able to deduct the money you spent for household goods, moving, traveling to your new home, and hotel costs while setting up your new home.
Just remember that not all costs can be deducted as part of your moving expenses. Some of these are:
- losses from sale of your home
- real estate taxes
- return trips to your former residence
- driver’s license
- expenses of entering or breaking a lease, just to name a few.
For example, during the year you lived and worked in Glendale, CA. The distance from your home to your office was 5 miles. You have accepted a new full time position in Bakersfield and decided to relocate instead of driving 120 miles one way each and every day. Your start date is next month and you plan to buy a place in Bakersfield to following month. Within the first month of your employment you packed up all your household goods and personal items and paid a moving company to transport your belongings.
- Since your new job will be 115 miles (120-5), you meet the distance requirement
- Any reasonable expenses to the moving company may be deduced.
- As the position is a full time position, you may be able to deduct your moving expenses.
To make your preparation for your tax return as stress free as possible, make sure you keep good records of your moving expenses and readily available for tax preparer. If in doubt, keep the receipt anyway, as it may be helpful later on.
At MiklosCPA, we understand that some of these rules and applicable limitation may be hard to follow and understanding the maze of the tax code may seem overwhelming. Let us help you make things easy and clear! Give us a call to help review your situation and guide you in making the right tax decision for you.