A Road Map To Moving Expense Deductions

A Road Map To Moving Expense Deductions

by Bernard Fruchtman, Esq.

(Excerpted from TaxTalk – Plain & Simple)

A tax deduction for moving expenses is available to employees and self-employeds for qualified moving expenses. Qualified moving expenses are deductible directly from gross income. That means they aren’t subject to the 2% floor that applies to most itemized deductions. It also means that non-itemizers can take the deduction in addition to the standard deduction. You can use the following outline as a road map to guide you to take full advantage of the moving expense deduction.

Job Related:

      The move must be job related for the moving expenses to be deductible.
    The move can be for a first job, a new or a changed job or business location, or a transfer.

Loophole:

    A person who moves to the US to retire and whose former principal place of business and residence were outside the US is eligible to deduct moving expenses.

Time Test:

    1. Employees:Employees must work full time for at least 39 weeks in the first 12 months after arrival at a new job location.
  1. Self-employeds: Self-employed persons must work full time for at least 39 weeks in the first 12 months and at least 78 weeks in the first 24 months after arrival at a new job location. Full time work as a self-employed or as an employee counts.

Distance Test:

    You’ll be able to deduct moving expenses only if your new job location is at least 50 miles farther from your old house than your old job was from your old house.

Deductible Expenses:

    Only the direct expenses of moving household goods and personal effects from your former home to your new home are deductible.

Loophole:

    The travel costs of a single trip for you and your family are deductible.

Trap:

    Travel expenses include the cost of lodging but not meals en route.

Non-deductible Expenses:

    The following indirect moving expenses are not deductible:

    • Pre-move house hunting trips
    • Temporary lodging in the new location
    • Expenses of buying or selling a house
    • Costs of terminating an unexpired lease

Bernard Fruchtman, Publisher/Editor of TaxTalk – Plain & Simple. TaxTalk – Plain & Simple, is a monthly newsletter that helps you save money by reducing your taxes. An annual subscription is $48 per year. For more information and a FREE ISSUE see web page at: http://village.ios.com/~taxtalk or send your regular name and address to TaxTalk, Inc., 1562 First Ave., New York, NY 10028