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Clients on the Move? Tax Tip Reminders From the IRS

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There may be nothing worse than moving, and the IRS has noted that summer may be a popular time for people to move. If some of your clients or family members are moving this summer to start a new job, or even the same job at a new location, the IRS has some tips on expenses that you may be able to deduct, and with luck, make moving just a bit easier to handle..

Expenses You Can Deduct

1) Expenses must be incurred within certain time and distance requirements for when and where you start work. 
Generally, you can include moving expenses that are incurred within one year of the date you first report to work at a new job location. Your move must also meet the “distance test”: Your new main job location must be at least 50 miles farther from your former home than your previous main job location was from your former home. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home.

2) Work test. 
Upon arriving in the general area of your new job location, you must work full time for at least 39 weeks during the first year at your new job location. Self-employed individuals must also meet this test, and they must also 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 allowable moving expenses if you expect to meet the time test. As always, there are some special rules and exceptions to these general rules.

3) Travel expenses. 
You can deduct lodging expenses (but not meals) for yourself and household members while moving to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, and parking fees and tolls, but you can deduct only one trip per person.

4) Household goods. 
You can deduct the cost of packing, crating, and transporting household goods and personal property, including the cost of shipping household pets. (Fido thanks the IRS!) You may also be able to include the cost of storing and insuring these items while in transit. You can also deduct the costs of connecting or disconnecting utilities.

Expenses You Can’t Deduct 

Now we get into what you can’t do. You cannot deduct as moving expenses: car tags, a driver’s license renewal, the purchase price of your new home and the costs of buying or selling 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. You can usually deduct only those expenses that are reasonable for the circumstances of your move.

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.

Finally, the IRS suggests that you update your address with them as well as with the U.S. Postal Service.

For additional coverage of this issue and similar ones, we invite you to sign up with AdvisorOne’s Summit Business Media partner, National Underwriter Advanced Markets, for a free trial.

You may also be interested in signing up for a free trial with another Summit Business Media partner, Tax Facts Online.