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Tax Implications
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If you are relocating as a result of a new job or job relocation, keep all of your receipts because you may be able to deduct your expenses from your taxes. Figuring out whether your move is deductible can be a little tricky, but here are some tips to help you figure it out.
The first qualification for deducting your moving expenses from your taxes is having paid all the expenses yourself. If your employer paid for your move, don’t try to also deduct the costs. If you did pay for the move yourself, here are the rules for qualifying:
Time Limitations:
You may qualify to deduct your moving expenses from your taxes if you worked at least 39 weeks within the 12 months after your relocation. This is true even if your move was not work-related, as long as you did in fact have a full-time job during the 12-month period. Once the 12 months has passed you may no longer deduct your moving costs from your taxes, unless you have reasons of death, disability or involuntary separation.
Distance Limitations:
If you new job is located at least 50 miles farther from your old home than your former job location, you may be eligible to deduct your moving expenses. Sound confusing? It is. To calculate this distance you must first figure the distance between your old house and your new job. Then, subtract the distance between your old house and your old job. If the result is equal to or greater than 50 miles, you pass the distance test. Still confused? Here’s an example:
Let’s say that your old house was in Sacramento and your new job is in San Francisco. Therefore, the distance between your old house and your new job is 90 miles.
Now let’s say that your old house and your old job were both in Sacramento and were 2 miles away from each other. Therefore, the distance between your old house and your old job is 2 miles.
The equation, then, is: 90 miles – 2 miles = 88 miles. This distance is greater than 50 miles, therefore, you’ve passed the distance test.
Which expenses are deductible?
- Moving expenses for household goods and personal effects.
- Necessary lodging en route to your new location.
- Storage of household items (no longer than 30 days).
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