Moving expenses: The IRS provides you with handsome tax deductions

Even though most people detest the process of moving, yet it is something that one might have to do any moment and more so, multiple times. However, not many such unfortunate souls know that they can claim moving expenses out of their annual tax return. This a person can do when either she/he is moving or has done so in less than a year of joining a new company or job.

Moreover, people who weren’t lucky enough to have employers lined up to hire them before they moved, or that they didn’t land a job right away after relocating to a different place, may under certain conditions, claim moving expenses. But, one has to stop and take a look at the rules in order to find out whether or not she/he qualifies for the said tax deductible moving expenses.

The IRS and its two elementary rules

Everyone cannot take advantage of this tax deduction. Hence, the Internal Revenue Service (IRS) follows certain fundamental rules so that you can benefit from them with ease. They are:

Distance test - This is one of the two requirements that you need to fulfil. This rule specifies that your new home must have a minimum distance of 50 miles away from what you had while working at the previous location and your old home. In case you worked from home prior to moving off to a new place, or didn’t have any workplace at all, then your new job should be at least 50 miles farther from your old home. Though initially these criterias might confuse you, yet there is a worksheet provided by the IRS titled “IRS Form 3903” to help you figure out your actual moving expenses.

Time test - According to this rule, you must be a full-time worker for a period of not less than 39 weeks in the next one year (12 months) after relocating or moving. Here, things might get murkier and may even pose a real financial challenge for you to overcome. This is because if you move late in a given year, then you won’t be able to qualify for the tax deductions unless the current tax year has expired. Moreover, you will not be allowed to take home any deductions in the immediate following year after moving.

Still, the IRS can permit you to claim the deductions, provided you are willing to work for at least 39 weeks as a full-time employee following your move. It may happen that a year has passed and you couldn’t fulfill the necessary requirement to become eligible for the tax breaks, then in that case, the IRS allows you to have your tax return amended by filing another form 1040X, known as the Amended U.S. Individual Income Tax Return. Furthermore, the amount deducted by you can be reported as income in your tax return the following year under the “other income” category.

How the IRS treats travel costs here

If you spend money for both housing (accommodation or lodging) as well as transportation, then you and your family members would be considered eligible to relocate from your old home to a new one. However, money spent on food items or for meals while travelling doesn’t come under the ambit of this particular law.

Still, the IRS gives you the permission to include the rental of a vehicle paid by you. In order to get reimbursed for such expenses you should have all the receipts and keep them all in a well-organised fashion. Keep payment bills of items like gas purchases, tolls, gas purchases, hotel charges, etc in a secured place so that you can apply for the tax deductions.

What about the utility fees

As far as utility costs are concerned, then the IRS permits you to deduct the expenses incurred to connect or disconnect utilities, in case you’ve been charged with any kind of additional fees. But, the IRS doesn’t count any sort of the late fees or reimbursable deposits when deciding whether or not to award you with the said tax deductions.

Where does the packaging materials and shipping expenses fare?

To claim tax deductions for these kinds of expenses, you must have the original payment receipts issued by the moving and storage company from whom you’ve asked for help. Moreover, the IRS clearly states that you won’t have even a dollar deducted regarding money spent on purchasing boxes. This is because the IRS already provides you with tax benefits for the costs incurred to pack, crate and transport your belongings and various other household goods.

Apart from that, you can also include the cost of insuring as well as storing your personal and other household items while traveling. Besides, the IRS is generous enough to provide you with tax break for any amount of costs associated with transporting your family pets in your annual tax return.