It’s tax season. Whether you prepare your own taxes or have someone else prepare your taxes, you need to get the most out of your return while doing it accurately. There’s a deduction that could help you get a little more bang for your buck.
The economy is not roaring by any stretch. The unemployment rate is still high at 7.8% (U.S. Bureau of Labor Statistics). In addition to being unemployed, many Americans have had to relocate in order to find a job. That is where this blog post will come in handy. These Americans need to be sure not to overlook a possible tax deduction that could save them some money: the deduction for moving expenses.
There are certain requirements that need to be satisfied before an individual can claim the deduction for moving expenses. If you have your taxes done by a professional, you should discuss the deduction with them if you think you qualify. If you do them on your own, I’ll highlight some main points about the deduction for you.
In general, in order to claim the deduction, first, the move should be related to the start of work (IRS). Second, you must pass a distance test as specified by the IRS. Your new job location needs to be at least 50 miles farther from your former home than your old job location was from your former home (IRS). Finally, you must pass a time test as specified by the IRS. If you are an employee of a firm, you must work full time for at least 39 weeks during the first 12 months after your move (IRS). If you are self-employed, you must work full time for at least 39 weeks during the first 12 months after your move and at least 78 weeks during the first 24 months after your move (IRS). If you moved during 2012 and have not completed the time test yet but expect to in 2013 or 2014, you can still claim the deduction on your 2012 return (IRS). The rules can have exceptions and additional requirements so it is highly recommended that you speak to a tax professional before claiming the deduction.
Moving expenses that are deductible include, but are not limited to, the costs for packing and transporting personal property, lodging costs during the move, and the expense of driving a personal vehicle (IRS). Meals during the move are not deductible (IRS).
Overall, depending on your tax situation, the moving expense deduction can make a big difference if claimed. So don’t overlook it.
*To reiterate, it is recommended that you discuss the deduction with a tax professional before claiming the deduction.
Financial Executive, Member FPA
Kaufman Financial Services