Are you on the move this summer?
With the local housing market showing signs of improving and, since I am moving this summer myself, I find it relevant to share some basic income tax tips in regard to moving expenses.
Did you know that moving expenses are deductible! If you itemize your expenses, you can take advantage of this allowable deduction as long as you save detailed records and receipts of your expenses. Some examples of expenses that are deductible include your moving boxes, truck rentals, movers, travel costs, air fare, etc. The expenses have to be necessary and part of the act of moving. Even the costs of traveling between your old residence and the new one can be deducted.
There are limits and qualifications to using moving expenses as an itemized deduction. First, your move must be work related, usually to start a new job but it can also be if your current employer is requiring you to move. Second, the new location of your work must be at least 50 miles farther from your previous home than the new home. And finally, the move has to take place within one year from the date your new job started, or the date your employer required you to change work locations.
Moving expenses do not include home improvements or changes done to your new home prior to moving. Those types of costs go into the calculations of possible tax consequences when selling your home, which is a topic for another day.
As with any other deduction, the key is keeping your receipts and proof of expenses.
IRS Circular 230 regulates written communications about federal tax matters between tax advisors and their clients. To the extent the preceding correspondence and/or any attachment is a written tax advice communication, it is not a full “covered opinion”. Accordingly, this advice is not intended and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS regarding the transaction or matters discussed herein.