When Can You Claim Moving Expenses As A Tax Deduction
Moving can be expensive, but did you know that you may be able to claim some of those expenses on your taxes? If you relocated for work, you might be able to deduct moving expenses on your tax return. In this blog post, we’ll look at when you can claim moving expenses as a tax deduction and what qualifies as an eligible expense.
Firstly, it’s important to note that the IRS has specific rules and requirements for claiming moving expenses as a deduction. To begin with, your move must be job-related, meaning that you have to move because of a change in your job or business. The move has to be closely related to the start of work, and the distance between your new job location and your previous residence must exceed 50 miles. If you meet these requirements, then you can claim your eligible moving expenses.
Secondly, only certain expenses are deductible. Eligible expenses include the cost of hiring a moving company or renting a moving truck, packing supplies, and transportation expenses such as gas, bus, and train fares. However, meals during the move, house-hunting expenses, and any expenses related to selling or buying a home are not deductible. It’s important to keep all receipts and records related to your move to support your deduction claims.
Thirdly, there is a time limit for claiming moving expenses. You can only claim your eligible moving expenses if they were incurred within one year from the date you started working in the new location. This means that if you moved before starting a new job, you cannot claim your moving expenses until you start your new job, and you have to incur your expenses within one year of that date.
Fourthly, the type of employment matters when it comes to claiming moving expenses. If you’re an employee, you can claim your moving expenses as an above-the-line deduction, which means it reduces your taxable income. If you’re self-employed or an independent contractor, you can claim your moving expenses as a business expense on your Schedule C, but you must meet two years of the time test and distance test requirements to qualify.
In summary, claiming moving expenses as a tax deduction can be a great way to offset the costs of relocating for work. Remember, you must meet the IRS requirements, like the time and distance tests and the job-related move criteria, and only certain expenses are deductible. Keeping accurate records and receipts is necessary to claim your deductions. If you think you might be eligible, talk to your accountant or tax professional to ensure you’re following the regulations and maximize your deductions.