Tax Deductions & Moving Expenses
The IRS provides some tax relief for people who have had to move for job-related reasons by allowing taxpayers to deduct certain moving expenses from their taxable income. The moving expenses deduction is an above-the-line deduction. This means it can be taken in addition to the standard deduction instead of being an itemized deduction, which would require you to forgo the standard deduction in order to claim the deduction.
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Eligibility Requirements
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To claim moving expenses as a deduction, you must meet three criteria. First, your move must be work-related. Your new home must be closer to your job than your old home, and you must start working at your new job within one year of moving. Second, your new job must be at least 50 miles farther away from your former residence than your old job. For example, if your old job was six miles from your former residence, your new job must be at least 56 miles away from your former residence. Finally, you must work full-time for at least 39 weeks out of the first year that you are in your new home.
Mileage Deductions
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If you meet the requirements for taking the moving expenses deduction, you can write off vehicle expenses at $0.24 per mile in 2009. For example, if you had to drive 400 miles to your new home, you could deduct $96. You can only deduct mileage expenses for one trip from your former home to your new home. You can also deduct any tolls you pay along the way.
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Other Expenses
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You can also deduct the cost of getting your property from your former home to your new home. This includes hotels that you had to stay in along your trip, storage facilities used to house your possessions for up to a month, and any costs associated with turning off your old utilities and turning on your new ones.
When to Take the Deduction
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If you are not reimbursed by your employer for your moving expenses, you can deduct them during the year that you pay them. If you are reimbursed for your moving expenses and the reimbursement was part of your salary, you can chose to deduct them in the year that you pay them or the year that you are reimbursed. If you chose to deduct the expenses and are reimbursed for them the following year, you must include the reimbursement as taxable income on your tax return.
How to Take the Deduction
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The deduction for moving expense is calculated using IRS Form 3903. Once you have completed this form, you can transfer the resulting deduction to your tax return. The deduction is taken on line 26 of both Form 1040 and Form 1040 NR. If you use Form 1040EZ, you cannot claim the deduction.
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