Did you relocate for a job in 2013? If so, your moving expenses could mean big tax deductions. In a previous post we noted all of the possible items that can be deducted when you have to move for a new job or relocation of your position/business. Now to make sure you’re able to get back every last penny possible check to see if you qualify for the moving deductions.
What You’ll Need for Job Relocation Tax Deductions
Receipts for Expenses – Today purchases made on our credit cards and debit cards can easily be looked up, but in order to make deductions you’ll need to have a receipt that shows the purchase.
Itemized Deductions – In order to make and figure the moving deductions for moves made within the U.S. you’ll need to itemize everything on Form 3903. A separate form must be used for each move if more than one was made in the year. The total deduction amount is entered on line 26 of your 1040.
Distance and Time Test Requirements – In order for your moving expenses to qualify for deductions you will have to meet the distance test and time test requirements. The time test requires that deductions are for moving expenses incurred within one year of starting a new job or moving to a new job location. Another time requirement is that you must work for a minimum of 39 weeks on a full-time basis within the first 12 months of moving to the new location. In addition, self-employed individuals will need to work at least 78 weeks within two years after the move.
The distance test requires that your new home be closer to your new job location than your previous home. Also your new workplace has to be at least 50 or more miles farther from your previous residence compared to your old workplace.
There are exceptions to the distance and time test requirements, which can be found in Publication 521. Military personnel that are required to move due to a military order are automatically exempt from the requirements.
Caveats for Getting Moving Tax Deductions and Credits
If you meet the requirements noted above it’s about time to start deducting the items listed in our post titled Tax Deductions for Moving Expenses in 2013. But wait one second – there are still a few caveats that need to be covered.
Caveat #1 – If you were reimbursed by your employer for any of your moving expenses you’ll have to note the reimbursement. If the reimbursement wasn’t included in your income you won’t be able to claim the covered expenses as a deduction on your 2013 tax return. How everything is factored into your taxes will depend on whether the employer used an accountable plan or a non-accountable plan. This chart from the IRS explains how to determine the best way to report expenses when you received some sort of reimbursement.
Caveat #2 – You can’t double dip on the deductions by claiming them as a moving expense and as a business expense. They can be one or the other but never both. If you pay for travel, lodging and meals while working at a new location temporarily (less than a year) before a permanent move then that is considered a business expense not a moving expense.
If you are unsure how to figure in all the moving expenses and possible reimbursements have a sit down with your HR department to see if they can provide any assistance. Hiring a professional accountant to help with your taxes is your best bet for ensuring everything is filed correctly after making a job related move.
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