Moving to a new home is all about change, from the change of an environment to the change of the interior design. But one of the lesser-known differences is that the moving process affects your taxes. If you move to your new home, you might be able to deduct the expenses of the move on your federal tax return the following year. However, this may only come in play if you move to begin a new job or continue your previous career in a new location. If you want to deduct your moving cost, it must meet three requirements:
First of all, your move should be similarly related to the start of work. Mostly, you can consider moving cost within a year of the date you begin work at your new location. Please note that there may be additional rules for this requirement.
Secondly, your move must pass the distance test. Your new job location must be a minimum of 50 miles farther away from your old home than your previous job location. For example, imagine your last job was three miles away from your old home. If you want to pass the test, your new position should be nothing less than 53 miles from your old home.
Lastly, you must pass the time test. You must be working full-time at your new job location or a minimum of 39 weeks for one year after the move. For those who are self-employed, you must pass the test too. Furthermore, you must work full-time for a minimum of 8 weeks during the first 2-years at your new job location. In a situation your tax return is outstanding before you undergo the time test, you will still be able to claim the deduction only if you expect to meet.
Tips for those who are eligible for this deduction
Travel: You can reduce some transportation and lodging costs while moving. This deduction does not only apply to expenses for yourself while moving but other household members too.
Household good and utilities: You can deduct the cost of packing and shipping your belongings. It may include the expenses to store or insure your items while moving. You can also deduct the cost to connect or cut off utilities in your old or new home.
Expenses that are not deductible: You might not be able to deduct the following:
- The cost of selling your house
- The cost of breaking a lease
- Some of the purchase cost of your new home
Reimbursed Expenses: If after some time your employer pays for the expenses of a move that you had reduced on your tax return you might need to add the payment as income.
Update your address: Whenever you move, ensure that you update your current address with the IRS and the U.S. Post office.
Reach out to your personal tax advisor for complete information to make sure you are doing the right thing with your taxes after your move.
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