Deducting interstate moving costs – tips and tricks
Tax season is a favorite time for many Americans – but not really. This is often the time that people find quite difficult. Sometimes there are just way too many papers you need to deal with, or there are things you just don’t understand. This is why a lot of people will opt to hire a specialist to do their taxes for them. However, a good number of people will know what tax returns they can apply for – generally. But did you know that there are ways for deducting interstate moving costs as well? So, if you have moved interstate this year, then there are ways for you to get some money reimbursed during the tax returns. If you are still confused or curious about how to do this, you are in luck! Your Upper East Side moving company is here to help you! Find out more in the article below!
Is deducting interstate moving costs really possible?
Some might wonder what’s the catch and if you really can get some money back from tax-returns. Well, just like every tax-related subject, there are a lot of things you need to look into. A general rule says that you can deduct most of (or even all of) your expenses, if your move was 50 miles away, and if it was for work. However, there is a palette of caveats and special circumstances that bend this rule.
What this means, however, is that hiring a moving company is not as expensive as you might originally have thought. There is a large array of tax deductions that you can claim once your IRS returns hit. As we continue, we will go over the ways in which you can qualify for the tax returns, and achieve your cheap moving that way.
In order to qualify for deducting interstate moving costs, you will probably need to satisfy three conditions that IRS has for you:
- The first is related to how close you are to the start of your work. It takes into account both the physical distance as well as the time proximity in order to make deducting interstate moving costs happen for you;
- The second requirement is the distance test, while the third is
- The time test.
The proximity of the move and the start of your work
This requirement is pretty simple. You can deduct any moving expense, as long as it is within one year of you starting your work. As far as the distance is concerned, your new home needs to be closer to your workplace than your old one. What this means is that you can deduct the moving costs if they happened no more than one year prior, or one year after your move with nation-wide movers NYC. You can even move without having a job waiting for you, but in order for the costs to be deducted, you need to find one year into your move.
However, you cannot deduct your moving costs if you are still working at the same address. You can do it, though, if you are working for the same company, but get a transfer to a new location. Your new home ought to be closer to your new job unless the person you are working for requires otherwise.
Another exemption from the rule is how long it takes you to commute to work. If your new location brings along a shorter commute to work, then you can still apply for tax-deductions. However, you will need to prove it. For example, you are moving 10 more miles away from the new job, but the old route leads you through the busy downtown. If your new commute takes 20 minutes less, then all you need is to prove it to get a refund.
The distance test
The distance test for deducting interstate moving costs is a fairly simple one. Your new workplace needs to add 50 miles to your current commute in one way from your old home. An example will help demonstrate this. Let’s say your old job is 10 miles away from your old home. Then, you get a new job 40 miles away from your old home. This will not qualify you for tax refunds since it only adds 30 miles to the commute.
On the other hand, let’s say that the distance between your old home and your old office was 10 miles, while the distance from the new office and old home was 65 miles. This makes it a 55 miles longer commute, and that qualifies you for deducting interstate moving costs.
The time test
The time test might be the simplest one yet. Don’t worry, it doesn’t involve too much Math, either! What it needs from you is to have full-time work for at least 39 weeks out of the first 12 months after you use professional movers to move. These weeks don’t need to be in continuity – you can take breaks. You also don’t need to work in the same company for this time, but the commuting area should remain the same.
Of course, there are some changes to these rules. If you are self-employed, then this time doubles. You will need to work full-time for at least 78 weeks out of the first 24 months after your move takes place. After doing that, you can start deducting interstate moving costs.
What can you deduct?
So now that you know the requirements of deducting interstate moving costs, you might wonder what you can actually deduct in the forms. Well, there are basic expenses. These are things like packing materials and professional transport of your items. They also include the travel costs between the two homes. The default rate is 23 cents per mile. However, you can also keep a journal of all your expenses (excluding food). The catch is that you can only deduct a single trip. The vehicle maintenance, sightseeing, and similar costs are not tax-deductible in this category.