Moving and taxes : Rooftop Views

Rooftop Views

Moving and taxes

Now that 2008 is over, it’s the right time for you and your clients to begin thinking about taxes. Many of us are getting our records in order in preparation for tax day, April 15, 2009. If you or your clients have made a move this year, deducting moving expenses may be on your mind. But are all expenses allowable tax deductions?

The IRS does allow tax deductions for some of the costs associated with a move to accommodate a job in a new location. There are, however, two tests which must be met in order to qualify for deductions.

Test 1 - Distance Test

To qualify for a deduction, your new principal workplace must meet a 50-mile test. The distance between the old home and old work minus the distance between the old home and the new work must be greater than 50 miles. In other words, if the commute to the old workplace was 3 miles, a commute from the previous home to the new workplace must be at least 53 miles. If the person did not have a job before moving, then the new job must be at least 50 miles from the previous home.

Test 2 - Time Test

A person must work full time in the general area of the new workplace for at least 39 weeks during the 12 months right after the move. There are exceptions to the time test and other rules apply for those that are self-employed.

If you are not sure if you or your clients meet the requirements to deduct your moving expenses it is best to check with a tax advisor or visit the IRS website, Publication 521, and Form 3903 for more details.

If both tests are passed then some expenses may be deductible:

- Costs for packing, crating and movement of your household goods
- Up to 30 days of storage and insurance for household goods
- Transportation and lodging expenses (not meals) while traveling to new location

If you have clients who have made a move in 2008, it is a good idea to advise them to check with a tax advisor before deducting their expenses to make sure that they take the right deductions. According to Forbes, one of the top reasons for IRS tax audits is claiming too much for itemized deductions, including the deduction of moving expenses.