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Moving Expense Deduction

posted Aug 17, 2015, 10:14 PM by Zaher Fallahi   [ updated Aug 17, 2015, 10:15 PM ]

If you move your home you may be able to deduct the moving expense on your federal tax return. This may apply if you move to start a new job or to work at the same job in a new location. To be eligible, your move must meet three requirements:

1-      Your move must closely relate to the start of a new work, or the same work from a new location.  In most cases, you can consider moving expenses within one year of the date you start work at a new work place. Additional rules apply to this requirement.

2-      Your new main job location must be at least 50 miles farther from your old home than your old job location. For example, if your old job was three miles from your old home. To meet this test, your new job must be at least 53 miles from your old home.

3-      You must work full-time at your new job for at least 39 weeks the first year after moving. If you are self-employed, you must also meet this test. Also you must work full-time for a total of at least 78 weeks during the first two years at the new job site. If your tax return is due before you meet the time test, you can still claim the deduction if you expect to meet it.

See Publication 521 for complete information regarding Moving Expense Rules.  If you qualify for this deduction, here are a few more tips from the IRS: 

1-      You can deduct certain transportation and lodging expenses while moving. This applies to costs for yourself and other household members while moving from your old home to your new home. You may not deduct your travel meal costs.

2-      You can deduct the cost of packing, crating and shipping your household goods. This may include the cost to store or insure the items while moving in transit. You can deduct the cost to disconnect at the old home and connect utilities at your new homes.

3-      Expenses you cannot deduct.  You may not deduct:

a.       Any part of the purchase price of your new residence.  These may be added to the basis of your new home.

b.      The cost of selling your home. This may be deductible as cost of selling your home.

c.       The cost of breaching a lease contract and entering into a lease.

See Publication 521 for more examples.

1-      If your employer later reimburses you for your moving expenses that you deducted on your tax return, you may need to include the payment as income. You must report any taxable amount on your tax return in the year you get the payment.

2-      When you move, make sure to update your address with the IRS by filing the Form 8822 .

Zaher Fallahi, Tax Attorney, CPA, is an IRS Defense Attorney, and assists taxpayers including Americans Living Abroad and Non-Resident Aliens subject to the US tax law, in resolving their tax controversy regarding their Offshore Voluntary Disclosure Program (OVDP), Report of Foreign Bank and Financial Accounts (FBAR), Foreign Account Tax Compliance Act (FATCA) and Foreign Trust. The firm handles Offer-In-Compromise and non-filed tax cases.  Telephones: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), e-mail taxattorney@zfcpa.com

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