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About Deducting Moving Expenses
You probably didn’t know that you can deduct certain expenses you might incur when you try to move from your total tax income. Simply moving will not automatically qualify you for tax deduction. Here are some things that you need to know in order to be able to deduct whatever moving expense you may have from your total tax liability.
What Are The Requirements?
The basic requirements to qualify for this type of tax deduction is that you must be moving for the purpose of seeking a new job in a new city, or if your job is assigning you to another city or state. You should be qualified to deduct moving expenses from your income if you meet these requirements. All costs and expenses that you may incur in the process of moving can be included in your total moving expense that would be deducted from your total tax income. These would include the cost of travel, gas, lodging, as well as the shipping and packing costs of moving some of your personal properties and goods. If you have already made a determination that you qualify under these requirements, you must now pass the distance and time tests to truly qualify.
Distance Test
One of the tests that you need to take in order to pass the requirement is the distance test. This test basically tests if whether the distance from house to your new job should be greater than the distance between your old home and your old job. For example, when you use to commute about 10 miles to your old job from your old house before, but now, it would take about 60 miles for you to commute from your old house to your new job, this shows that there is a great difference in distance between the two. If you move to your new house because of this significant difference in distance, you can actually include this in the expenses that could be deducted from your total tax income.
Time Test
Another test that you must pass is the time test. Basically, this test will ensure that when you moved from your old place of residence to your new one, that it was specifically for business. This can be measured by the number of weeks that you have spent working full-time after your move. It is usually 39 weeks within the 12 months after your move for employees, 78 weeks within a 24 month period for those who are self-employed.
What Are The Limitations?
When you move mainly because of your job, you can actually get certain reimbursements from your new employer, or from the company that is hiring you, depending on their conditions and requirements. If, however, there are still some amount that is not covered in the reimbursements made by your company, then you can actually include those in the amount of deductibles from your total tax income. As long as you comply with all the requirements for it, you should be able to claim the tax deductions.
What Are The Steps In Deducting Moving Expenses?
When calculating how much exactly you can deduct from your total tax income based on your moving expenses, you simply need to follow these simple steps in order to determine how much deduction you can actually get. The very first thing that you need to do is examine the criteria, and make sure that you are qualified for the tax deduction. The requirements are all mentioned above.
If you are qualified, begin calculating how much moving expense you have incurred. Include in your calculation all costs and expenses, such as the costs for packing and moving your personal property to your new place of residence, gas, lodging, and other travel expenses, food storage for up to a month, and other legitimate expenses.
After that, save all pertinent documents that prove your claim so that you can support your tax deduction when the time comes that you need to show proof.
What Moving Expenses Can Be Deducted?
Basically, all moving costs and expenses that you have incurred during the actual move can be included in this list, such as the cost for shipping your vehicle, for transporting your pets, for packing and hauling all of your property, as well as your lodging expenses. Food expenses, however, are not included in the computation.
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