IRS Summertime Tax Tip 2014-20, August 18, 2014
Moving for work reasons? The IRS offers some insights on how you can deduct your moving expenses from your tax returns. Here’s what you need to know:
Plus, Pets’ moving costs could be deductible, provided they meet IRS conditions.
Deducting Moving Expenses: Three Key Requirements
In order to claim deductions for moving expenses, the IRS has outlined three primary requirements:
1. Relation to Start of Work
The move must be closely related to the commencement of your job. Generally, expenses that were incurred within a year from starting work at the new location are considered. However, there are additional specifications tied to this requirement.
2. Distance Test
The new main job location needs to be a minimum of 50 miles farther from your previous residence than the old job location. As an instance, if your prior job was 3 miles away from your old house, your new job should be at least 53 miles from your old house.
3. Time Test
Post the move, you should work full-time at the new location for at least 39 weeks within the first year. If you’re a freelancer or self-employed, the requirement is a minimum of 78 weeks during the initial two years at the new job location. If your tax return is due prior to meeting this criteria, you can anticipate the fulfillment of this requirement and claim deductions accordingly.
For a deeper dive into these requirements, refer to Publication 521, Moving Expenses.
Additional Tips on Deducting Moving Expenses
If you’re eligible for this deduction, here are more insights from the IRS:
1. Travel
Deduct transportation and lodging costs for you and your household members when transitioning from your old to new residence. However, meals during this travel aren’t deductible.
2. Household Goods and Utilities
Expenses related to packing, crating, shipping, storage, insurance (during transit), and utility connections/disconnections can be deducted.
3. Non-deductible Expenses
Costs like the new home’s purchase price, selling an old property, or lease-related expenses can’t be deducted. Check Publication 521 for a comprehensive list.
4. Reimbursed Expenses
In case your employer reimburses you later for the moving expenses you’ve already deducted, you might have to declare this payment as income on your tax return for the year you receive the reimbursement.
5. Address Update
Upon relocation, ensure that you update your address with both the IRS and the U.S. Post Office. Use the Form 8822, Change of Address for the IRS.
Premium Tax Credit: Reporting Changes in Circumstances
If you’ve availed health insurance from the Health Insurance Marketplace and received an advance on the premium tax credit in 2014, it’s crucial to report any changes in circumstances, like moving to a different address or any shifts in income, employment, family size, or other insurance eligibility. This ensures that you get the right premium assistance amount and prevent any discrepancies in advance payments.