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We are a mobile society these days. This is primarily due to the fact that our employment prospects require us to move from here to there. While moving is no fun, there can be a silver lining in the form of tax deductions.
The mere mention of the word moving sends a chill down my spine. It is my least favorite thing to do without a doubt. This is probably because I end up doing it more and more as do most of you for employment reasons.
Our grandparents would all be stunned to see how the job market works these days. Whereas the worked for one business for thirty or forty years, we work for a business for 3 or 4 and then move to some other job in some other location.
The federal government always seems to be about 20 years behind the times, but not in this case. It has acknowledge the changes in society and created tax deductions for people who move for employment purposes.
Since we are talking taxes, nothing can be straightforward. Yep, you have to pass a few tests before claiming moving deductions. First up, your new job must be 50 miles more from your first home than your new place of employment. Confused?
When it comes to taxes, examples always help. I live 3 miles from my current job. I apply and get a better job in another city that is 180 miles away and move. Since my new job is 177 miles away, I pass the mileage test.
One test is never enough with the IRS. There is another test that requires you to work roughly ten months out of the twelve full time after the move before you can claim the deduction. The exact requirement is thirty-nine weeks in the 12 months.
If you are self-employed, there is another time test. You have to meet the 39 week test above. You also must work a total of 78 weeks in the first 24 months after moving. You can take these deductions ahead of time if you expect to complete them.
There will be a natural temptation to claim moving deductions, particularly if you are close to passing the tests. Don’t. The IRS closely watches how taxpayers claim new tax deductions, so you don’t want to get audited.
Given all this work, are the moving deductions worth it? Well, they can be. It depends on what you incur as costs. You can deduct all reasonable expenses such as truck rentals and travel costs from your old home to the new one.
Tags: Business
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