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Moving Expenses – What Can You Deduct?

You are moving to a new town to take a job. It is going to cost money to make the move. The question that should come to your mind is whether you can deduct any of this stuff.

Moving Expenses – What Can You Deduct?

If you are moving to a new location seeking employment or because you have a job, you could be in luck. Yep, you can deduct some or all of your expenses.

First and foremost, you have to meet some basic tests issued by the IRS. Are you moving more than 101 miles? If you are taking a position with a company, do you expect to live in the new area for a year and work at least 39 weeks during that year? If you are self-employed, do you intend to live in the new area for two years and work at least 78 weeks during that time? Since you cannot read the future, you can make an educated guess that you will do so. If you can read the future, please contact me immediately. I have some stocks I would like to discuss with you.

Assuming you have met the IRS tests, you can now claim moving expenses as tax deductions. So, what exactly does that mean? Well, you can deduct the costs associated with packing up and physically moving your stuff from here to there including truck rentals, moving companies, boxes and so on. You can also include shipping costs for cars and pets. You can even deduct a room rental on the day you leave in your old town and the day you arrive in the new one.

When it comes to actually shipping yourself from point A to point B, the IRS gets a bit cheap. You cannot deduct any meals. None. Nada. You can, however, deduct costs associated with physically traveling and sleeping. There is no logical reason as to why you can deduct travel and accommodations, but not meals. Welcome to the world of tax.

Finally, a few crafty taxpayers have managed to get themselves in hot water over one issue. The IRS never lets a taxpayer double dip. If an employer reimburses you for any of your moving expenses, you do not get to claim the same expenses as a deduction! Trust me, you do not want to be sitting in front of an IRS agent trying to explain this one. The only exception to this rule is if the employer gives you a payment in advance to cover the move. Said advance is taxable income to you, so you can deduct your expenses against it.

Are you sufficiently confused yet? If not, keep in mind the above discussion only relates to federal taxes. Many states will also allow you to deduct certain moving expenses. The bad news is each state seems to calculate it differently!

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