How to Calculate the Tax Deductions from Your Move

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How to Calculate the Tax Deductions from Your Move

Staff Writer · Feb 19, 2010

Calculating tax deductions from your move might help you save money on your tax bill or get a refund. According to the Internal Revenue Service (IRS), you are allowed to deduct moving expenses if you moved to land or start a new job. Not just any move qualifies, such as moving to be closer to family or because you want a change. Grab a notebook, pencil and calculator and let’s see how much in tax deductions you can take from your move.

Make Sure You’re Qualified

The move must have occurred within one year from the date you went to work, and you must work (or plan to work) 39 weeks in the first 12 months after you arrive. It’s also not enough to have the intentions of working. You have to actually have worked at the new city or town you moved to. There are a few exceptions to this timing rule that are too complex to address here. There’s also a location requirement. Your move must put you closer to the job. If the difference is further away than where your former home was to your new job, you may not qualify. The IRS will allow a couple of exceptions to this as well.

Your new job needs to also be at least 50 miles farther away from your old apartment than your old job was from your old apartment. For example, let’s say your old job was 10 miles from where you lived; your new job needs to be at least 60 miles from your old apartment. Let’s assume you meet the timing and location qualifications and keep going.

Get Your Receipts and Bank Statements

Take out all of your receipts from that folder or box you used to save them all. Also, refer to your bank statements for help. There are various moving expenses that you’ll be able to put towards your moving tax deductions, but you need to know how much you spent on everything. You can get copies of some moving expense receipts from vendors and suppliers, like the cost of hiring a professional moving company. However, you can’t deduct smaller items, like a purchase of bubble wrap. If you haven’t moved yet and are planning ahead for tax deductions, keep receipts for everything and don’t lose them.

Total the Amount of These Expenses

There’s not much that you can deduct from your move. The two things you’re allowed to deduct are:

  1. The cost to move your goods and up to 30 days storage
  2. The cost to travel to your new home

You’ll prove this by filling out Tax Form 3903. All of your receipts that are “reasonably” related to one of these two can be deducted. However, you can’t include meals that you ate while traveling. Some costs to include are:

  • Packing supplies
  • Insurance for shipping or hiring movers
  • Connection and disconnection of utilities

From 3903 is one page, with only 5 lines to fill out. Once completed, you can add the final amount to your Tax Form 1040.

If you plan to use a tax software, such as www.turbotax.com, all of your moving tax deductions and your entire taxes can be done by answering directed questions. This may be the best option if you’re unsure about taking care of this yourself.

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