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Uncle
Sam can help pay many moving expenses
By
Kay Bell •
Bankrate.com
Americans have always been a mobile lot. 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 line 26 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.
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 trek to work. The distance between your
new job and your former residence must be at least 50 miles greater
than your old commute. 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 time requirement is twofold 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 have it a bit tougher.
When moving to a new locale, they must meet the year-to-move deadline
and work full time at their entrepreneurial enterprise for 78 weeks
during the first 24 months after relocating. Again, the worked weeks
don't have to be consecutive.
Once you meet the time and distance requirements,
gather up your moving receipts. The IRS-approved deductions include
the costs to move household goods and personal property, limited
storage and insurance fees, utility connection or disconnection
charges, some lodging and travel expenses (but not meal costs) near
your new and former homes, shipping costs for your car and even
travel arrangements for household pets.
A 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 that 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.
-- Posted: July 7, 2004
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