Hoping for a better lifestyle, people go on changing jobs, go on moving from one place to another.Â In the process there are expenses.Â You can claim most of these expenses as deduction from your income.
Youâ€™ll be happy to know that this deduction is over and above the standard deduction or itemized deductions.Â This deduction is additional.Â And the deduction has a wide coverage.Â If you are self employed, you can still claim this deduction.Â If you start a new job and move, you can claim this deduction.
There are three different tests, which should be met for claiming this deduction.
1.Â Â Â It should be job related
So you must start working on your new job within one year of moving.Â So if youâ€™re working in one company and resign and move 400 miles away to start a restaurant, then you qualify.
2.Â Â Â The 50 miles test
The new workplace must be 50 miles away from your old one.Â So if your old workplace was 5 miles away from your old home, then your new workplace must be at least 55 miles away.Â If you did not have old workplace and take up a job for the first time, and then your workplace has to be at least 50 miles away from your old home.
3.Â Â Â The tests of TIME
There are tests of time applicable. You must work full time for at least 39 weeks in the 52 weeks period.Â So you may not be working for a single employer for these 39 weeks, or you may not be working continuously for 39 weeks.Â However youâ€™ll need to work for 39 weeks within next 12 months.Â And you must work fulltime.
Suppose your work is seasonal.Â In that situation you are assumed to be working full time during the off-season weeks also if your agreement or contract covers that off-season period.Â Also you are considered working in the week when you are absent due to illness, strike etc.
If you are self employed, then you have to work full time for 39 weeks during the first 12 months and then another 39 weeks in next twelve months.Â So youâ€™ll need to be working for total 78 weeks during the 24 months period from the date you arrived in the new job location.
There are exceptions to this rule.
If your job is terminated because of disability, if youâ€™re transferred for the benefit of employer, if you are laid off or you died, then there is no need to pass the time test.
If you are a member of the armed forces and you are moving due to a permanent change of station, the distance or time test is not applicable to you.
Now let us turn to the important question of what is deductible.Â There are a list of expenses which are considered as legitimate moving expenses.Â They are
a.Â Â Â The cost to pack and move your household goods and personal effects. Â
b.Â Â Â The cost to store household goods for up to 30 days after the items where moved.
c.Â Â Â The cost of travel from the old home to the new one, including transportation, lodging on the way, and costs for the day when you arrive.
Remember, you can include expenses of only one trip per person.Â Also you cannot include expenses of your personal employees (maids, nannies etc.) You cannot deduct expenses on trips made for house hunting or temporary living expenses.
If your employer is paying part of these expenses, they will be included as your income on your W-2 form.Â And if you get any reimbursement from your employer, and then that will be deducted from your total expenses to arrive at your allowable deduction.
So you can easily get at least half of your moving costs paid by Uncle Sam!