With school out during summer for most people, the season becomes the peak time for people to move, especially those with school-age children.
If your move is a result of starting a new job or even the same job at a new job location, you may be able to deduct some of your moving related expenses when you file your 2012 income tax returns.
Here are some things you need to know to determine if this can benefit you.
Expenses must be close to the time you start work - Generally, you can consider moving expenses that you incurred within one year of the date you first report to work at a new job location.
Distance Test - If your new main job location is at least 50 miles farther from your former home than your previous main job location was from your former home, then your move meets the required distance test.
For example, if your old job location was 10 miles from your old home, your new job location must be at least 60 miles from that old home.
Time Test - Upon arriving in the area of your new job, you must work full time for at least 39 weeks during the first year at your new job location.
Self-employed folks must also meet a time test, but one that is quite a bit more lengthy. They must work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location.
If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test.
There are some special rules and exceptions to these general rules, so see IRS Publication 521, Moving Expenses for more information.
Travel - You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay, but you can only deduct one trip per person. Meals, however, are not deductible.
Household goods - You can deduct the cost of packing, crating and transporting your household goods and personal property, including the cost of shipping household pets. You may be able to include the cost of storing and insuring these items while in transit.
Utilities - You can deduct the costs of connecting or disconnecting utilities. This is a cost that is often overlooked.
Nondeductible expenses - You cannot deduct the following as moving expenses: the purchase price of your new home (or any part thereof), car tags, drivers license, costs associated with the buying or selling of a home, expenses of entering into or breaking a lease, or security deposits and storage charges, except those incurred in transit and for foreign moves.
Page 2 of 2 - Further, you can only deduct expenses considered reasonable for the circumstances of your move. Obviously this is a subjective determination, but any expenses considered excessive or unreasonable will not be allowed.
IRS Form to Use - To figure the amount of your deduction for moving expenses, use IRS Form 3903, Moving Expenses.
Reimbursed expenses - If your employer reimburses you for the costs of a move for which you took a deduction, the reimbursement may have to be included as income on your tax return.
Alternatively, if you receive such a reimbursement on a tax-free basis (i.e., it's not included in the Form W-2 you receive), then you cannot deduct the expenses so reimbursed.
Update your address - When you move, you should update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. You can use Form 8822, Change of Address, to notify the IRS.
More details are available in the IRS publication referred to above and in IRS Form 3903. IRS publications and forms can easily be obtained at www.irs.gov.
(By Lane Keeter, CPA / EGP, PLLC)