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Americans have always been mobile.
Our restlessness is even encouraged somewhat by the
Internal Revenue Service's tax deduction for moving
expenses.
To
write off your relocation costs, a move must be work-related. Then you have to
pass time and distance tests. But as long as a move meets these requirements,
it doesn't matter if it's your first job, the same job or a new job.
And while you have to use the long Form
1040 to claim the moving costs, you don't have to itemize
any other deductions. The costs are detailed on Form
3903 and the total transferred to the adjustments
to income section of your return. There is no Schedule
A to complete, no percentage-of-income thresholds to
meet, no deduction phase-outs because you made too much
money.
Moving
tax-break obstacles
The biggest moving hurdle, both practically and
taxwise, is the 50-mile distance test. As suburbia and
exurbia expand, this test is designed to ensure that
your move isn't just a way to ease your daily commute to
work.
The location of your new job
must be at least 50 miles farther from your previous residence than your last office was. That means if you lived 10 miles from your old
job, your new job must be at least 60 miles from your old home before
you can deduct moving costs. The IRS says to figure the distance using the shortest of the more commonly traveled routes; i.e., don't take the scenic route to make sure you meet the mileage measurement. Also, remember that the distance test only considers the location of your old home and how far it is from your previous job vs. the one for which you relocated, not your new residence.
Then there's the time requirement. It has two components and is Uncle Sam's way of guaranteeing that you don't
use tax breaks just to help you check out the scenery around the country. First,
moving expenses generally are deductible if incurred within one year of starting
a new job. Secondly, you have to work full time at a new job for at least 39 weeks
during the first 12 months. The worked weeks don't have to be consecutive or even
with the same employer.
Self-employed workers moving to a new locale
must meet the year-to-move deadline and work full time at their
entrepreneurial enterprise for 78 weeks during the first 24 months.
Again, the worked weeks don't have to be consecutive.
Accounting
for your movements
Once you meet the time and distance
requirements, gather up your moving receipts.
IRS-approved deductions include the costs to move
household goods and personal property, limited storage
and insurance fees, and utility connection or disconnection
charges.
Some lodging and travel expenses
near your new and former homes also are deductible, as are shipping
costs for your car.
Uncle Sam even lets you write off the travel arrangements
you make to get your household pets to your new home.
A few other
move considerations
In addition to the basic eligibility
and receipt requirements, here are few other things
to keep in mind:
If you're married and file jointly,
only one spouse needs to meet both the time and
distance tests. However, you cannot combine the
weeks your spouse worked with the weeks you worked
to satisfy the time-employed component.
If your new employer reimburses you
for some or all of your transfer costs, don't look
to the IRS for additional help. Moving expenses
paid by your boss aren't deductible.
If you deduct moving expenses and
then don't pass the time tests, you must file an amended
tax return or include the moving expenses in
your income the next year.
Details on moving expenses and tax deductions
can be found in IRS
Publication 521, Moving Expenses.
Freelance writer Kay Bell writes Bankrate's
tax stories from her home in Austin,
Texas, and blogs each day on tax topics at Don't
Mess with Taxes.
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