Nobody likes moving, but this is definitely one of the things in life that you’re going to have to deal with. A lot of people don't really stop and think about the type of move that they want to make, and this means that they might not get all of their tax benefits at tax time.
Does it really matter? After all, don't you just have to itemize in order to get moving expenses taken off your tax bill? Not so fast -- you might be cheating yourself out of a lot of tax savings because you thought you knew the rules. Here's what you actually need to know.
First and foremost, you need to think about whether or not the move qualifies for any tax breaks at all. If you're moving due to your work, then you can definitely deduct the expenses of your move. There's a catch, though -- the job must be at least 50 miles farther from your old home than it was previously. For people doing long distance moves, this is easy. But what if you're just trying to move across town? No dice -- you're going to need to move to practically another city just to claim the moving expense properly.
Keep in mind that you can't double dip -- if an employer is paying your way, then you're not going to be able to claim deductions. The IRS checks for this so don't think that you can just skate by. It would be very difficult for you to actually claim the moving deductions because you technically aren't paying for anything. Your employer would be the one that gets to claim the expenses.
When it comes to itemizing, you actually don't have to do that. You can deduct the moving costs or the rental truck that you use to travel -- including the one-way travel costs that we don't think about. Let's say that you have to move 500 miles away from your old home in order to take on a new job. That means that if you pay to have movers take your things, that’s tax-deductible. But what you might not realize is that your airplane ticket and the tickets of those in your household are also tax-deductible.
As you can imagine, proper recordkeeping is definitely a must. If you were ever audited, the IRS would need those receipts in order to make absolutely sure that you are actually claiming exactly what you need to claim. It's tempting to try to just claim everything, but it doesn't work that way. You have to make sure that you're taking only the expenses related to the move in mind. If you have to suddenly come back to your old home for something, the expense is not tax-deductible.
Do self-employed people qualify? Yes, but the documentation is a bit trickier. You need to prove that your business desperately needed you to move that greater distance in order to continue operating. The IRS tends to be more critical of self-employed people and corporations because there are so many more deductions that can be taken.
For the best information, we recommend looking at IRS Publication 521, Moving Expenses. It's something that's going to help you really figure out what's going to be tax-deductible and what's not. If you are getting your taxes prepared by someone else, you need to make sure that your tax professional handles this situation very delicately. This is one of those moments where just going to one of those franchise outfits might not be the best strategy -- especially if you are self employed. Getting a qualified accountant with plenty of experience can save you from being audited and losing the deductions -- and facing a higher tax bill. With so much riding on your taxes, you might want to make absolutely sure that you're getting everything settled as much as possible -- get started today!
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