Starting a new life by moving to a new place is a very thrilling experience! However, it can also be a bit pricey. We all wish to reduce the costs of our relocation as much as possible, but it can seem like an impossible task. So many factors are included in the moving process. However, don’t be discouraged! There are a few ways to successfully deduct moving expenses while still getting the best out of the relocation experience. Start planning early in order to have the best results. Use the following tips and plan your relocation smartly. After that, all you have to do is call Verified Movers and leave the rest to us.
How can you deduct moving expenses?
Deducting your relocation from your taxes is pretty easy! You’ll only need to fill out the IRS form 3903, and you’re ready to apply for your tax deduction. This form is for moving services you’ve hired. Make sure you fill out all the information truthfully and contact your accountant, lawyer, or your moving company if you have any questions. The movers you’ve hired should provide you with the extra information you’ll need. And your lawyer and accountant can help you fill out the parts which concern you.
Make sure to consult with your accountant before you deduct your moving expenses.
Who’s allowed to do it?
Not everyone can deduct moving expenses from their taxes. This is reserved for relocations that occur because of a job. Only then can you get some money back from your relocation. And not even all those who relocate for work can get a deduction from taxes. You must meet certain criteria in order to qualify. You’ll need to pass the distance and time test.
The distance test
This refers to the distance between your new job location and your old home. However, there is a catch. The distance between your home and your new workplace needs to be more than 50 miles longer than the distance between your old workplace and your home. If this seems complicated, think of it like this – your old job location was about 10 miles away from your home. You can qualify for expense deduction only if your new job is at least 60 miles away from your old home.
The distance between your new job and your old house is an important factor when trying to qualify for expenses deduction.
The time test
The main criterium for this test is that the time of your move aligns with the start of your new job. Specifically, in the first year after you move, you need to start the job, and you need to have at least 39 working weeks. That’s why it’s vital to start your new job as soon as possible. It can be really hard to find jobs in this day and age, but there are always options to consider. If you are looking for a full-time job, moving to Georgia can be the ideal solution. Georgia’s unemployment rate is among the lowest in the US, and it currently sits at 3.5% as of September 2021. Call one of the best interstate moving companies Georgia to get started today!
A stable job in Georgia means that you can apply for a deduction of moving expenses.
Next, if you’re a member of the USA Armed Forces, and you’re moving because of a permanent station change or an order, you don’t have to meet the time and distance tests. Apart from this, the location where you move to and from might make a difference in your tax return! When you want to deduct your moving expenses from your taxes, one of the best places to be is in Wyoming. So, if you still haven’t decided where you’ll want to move to, you can call the best Wyoming long distance movers. Schedule your relocation to a new place, and get a fat deduction from your taxes. It’s a win-win situation.
Wyoming is one of the best places to deduct your expenses.
Pro-tip: Florida is a state with some of the best tax advantages in the USA. Apart from expense deduction, the state offers many tax exemptions. If you’re interested in moving to Florida, check out state to state movers Florida for more information.
How can you claim your moving expenses deduction?
For example, if you’ve hired cross-country movers California you might need to claim your tax deduction in California, and not in the state you moved to. Make sure you check with your IRS agent because the policies may be different depending on where you moved from or how long you have been living in your new home before you decide to deduct your moving expenses. Apart from this, you’ll need to know the exact date by which you’ll have to submit your 3903 form to get your tax deduction.
What counts as a moving expense?
Before deducing them, we first need to establish what moving expenses actually are. Not every single dollar you spend on your relocation can count as a moving expense. They must be necessary, rational, and logical for the move. If something is deemed not vital to the moving process, it will not be counted as a moving expense. If you’re relocating for a job, you’ll be able to deduct most of your moving expenses. Apart from this, you can deduct moving expenses if you move by yourself or if you hire professional movers. That’s why, if you’re moving to Texas, hiring the best interstate moving companies Texas will be a win-win situation. The things you can claim on your deduction are:
- Transportation. The costs of moving yourself and your things to the new location count as necessary and relevant moving expenses.
- Insurance fees. They ensure that your items are safe; therefore, you are able to deduct them.
- Auto-transport. You are also able to deduct the expenses of moving your vehicle from your old residence to the new location.
- Storage. More specifically, the price of a storage unit for your things. This is especially useful if you and your things arrive before your new home is ready for you.
- Connecting and disconnecting your utilities. This includes heat, electricity, and plumbing. Connecting these can cost a fortune, but luckily, you can deduct it from your taxes.
- Lodging. If you need to take a break in long-distance relocation, you should check into a hotel. You should be careful when you want to deduct moving expenses such as this one since it’s really easy to misuse it. Temporary living expenses count for up to fifteen days, and they include both the costs of residence and meals during that time. Make sure to keep all the receipts!
- Maintaining your old home. This is another tricky one as it comes with a few conditions. This implies you moved out of your own home, but you weren’t able to sell it even if you made legitimate efforts to sell it. The second condition is that the maximum cost of maintenance is $5,000. However, it doesn’t cover all costs, only the following – heating, utilities, interest, insurance, and property taxes.
- Selling your old home. This covers all legal as well as advertising fees.
- Buying a new home. Similar to the previous one, legal fees for buying a new home are deductible.
Things you can’t deduct
Unfortunately, there are some things you can’t deduct from your moving expenses. Some of the most common ones are:
- Food. You shouldn’t put the costs of food you spend during your relocation in your 3903 form, as it’s a regular everyday expense, and it doesn’t only apply to moving.
- Injuries. Any injuries you sustain during the move won’t be deductible. You’ll need to find a different form for those. In addition to this, any damage to your items doesn’t make them deductible from your moving costs. Luckily, there are things which will make your relocation easier. Just follow helpful moving tips and your relocation will be easy, even though you may not be able to deduct every last thing.
- Renovating your old home. Embellishing your old home to make it better looking for selling doesn’t fit into the necessary category.
- Travel expenses. Whether they be while searching for your new house or job hunting in another city, these types of travel expenses will not be deducted
- Costs induced by selling your old home. These include costs that came up if you postponed selling your home due to investing reasons. Also, they can be a result of the real estate market improving.
An important heads-up: you cannot deduct the cost if you don’t have adequate documentation. All expenses must have the required supporting documents for you to be able to submit them. Also, if your employer reimbursed you for certain costs, you will not be able to deduct them.
Having relevant and legitimate documentation for your moving expenses can greatly help you in deducting the expenses.
Things you can spend your deducted money on
Now that you have deducted moving expenses and saved some money, it would be best to invest it in something. Since this will be a lot of money you won’t need to pay as your taxes, you can use it to make your life better. Go on a huge vacation to celebrate the start of your new life, decorate your new home, or get that thing your kid’s always wanted.
Spend your extra cash on decorating your home!
There’s no point in saving a lot of money and just sitting on it. You can use it for starting your kid’s college fund or getting those dancing classes you’ve always wanted. Whatever you decide, make sure it’s worth it!
Be patient – it will pay off (literally)
Deducting your moving expenses isn’t an easy job. It’s a tedious and lengthy process that will surely get on your nerves. However, if you are meticulous enough and strong-willed, it will all turn out for the best in the end. Be mindful of all the small details which we covered today and remember to plan on time. With a little patience and the help of Verified Movers, you will enjoy your new home in no time!