The tax season is coming up, which means that many people are already reviewing their records to see what deductions they will be able to use to save a little extra money. One of the most common topics that tax professionals get asked about is moving expenses. This article will address how and when they can be claimed, but remember, this information is only applicable for a personal tax return.
What Moving Expenses are Allowed by the IRS?
The IRS is flexible about what moving expenses can be used for this deduction, but they must be within reason. For example, a person can deduct payment for a storage unit if it was used on a short-term basis for the sole purpose of transferring all of one’s possessions from one location to another. However, it is best to take a conservative approach to deducting moving expenses. Aggressive or excessive deductions may cause a delay in processing the return or trigger a tax return audit. Mileage, fuel, tolls, packing supplies, airline or train tickets, and moving trucks are all reasonable. And don’t forget to save all of your receipts in case any questions about your move come up.
When Can a Person Deduct Moving Expenses?
The only time that the IRS allows moving expenses to be applied to a return is when moving for a job. The job can either be a position with a new employer or transfer with a current employer to a new location. Additionally, for moving expenses to qualify for the deduction, the new job site must be a minimum of 50 miles away when considering the shortest route to get there. And only those who work full-time before the move qualify for it. If the new job transfer falls in the next tax season, but a person incurs expenses before this, they can deduct all the moving expenses in the current tax season. However, if the move doesn’t occur as planned, an amended return will have to be filed at a later date.
How Can Moving Expenses be Deducted?
Since the IRS needs more information about your move, they ask taxpayers to fill out a special form to attach to their original return. It is called “Form 3903.” Some of the filing rules change each tax season, so it is best always to check if any changes have been made to the form each time that it is used. This most commonly applies to those who have to frequently change locations for their job, such as a person who is in the military.