Make IRS Pay Your Moving Expenses Because of Your New Job
Money's Photostream, Flicker
Life as an American is getting increasingly expensive. A lot of times you just want to throw a fit whenever the tax season begins. Or sometimes you just shut everything out and prefer to scour for funny posts at Craigslist or ogle at Charlie Sheen’s hotness. A new job that requires you to move can even compound this feeling for you.
But you might want to pay extra attention on your moving expenses and sacrifice a bit of your extra time that you normally devote to Facebook. By doing so, you might score significant savings on your tax payments. Say you landed a job in Georgia and you would have to move from your current state which is North Carolina–you can actually avail of tax deductions from the IRS. If you moved or re-located to a new place or home that is directly related to your new job, Uncle Sam actually makes life a little less painful for you. Read below and see if you are qualified for these tax deductions:
There are three simple tests you have to pass in order to qualify for moving expense tax deductions:
1. Your move is justifiably related by the start of work (See figure A)
If the distance from your new home and the location of your new job is not greater than the distance of your former home to your new place of work.
If not, you can still pass this requirement if:
•You are required by the new employer to live in your new home as one of the conditions for your employment.
•You incur less time and less cost on commuting to your new place of work. An example is if you have always lived far from your previous job but didn’t consider moving to a nearer place. Now that you are working for a new company, you have decided to save on travel expenses and rented a new apartment that is nearer to your new place of work. This is even if the distance you’ve traveled in your old job is more than the distance you travel today.
2. You pass the distance test
If your new primary job location is at the very minimum fifty miles away from your old residence, than your old main job location was from your former home. IRS gives a formula in order for you to determine if you pass the test. It goes something like this:
A is for number of miles from your old home to your new employment=_____
B is for umber of miles from your old home to your old workplace=_____
Subtract B from A. The result should not be less than 50 miles in order for you to qualify.
Example:
(A) In my new job I enter the distance to 85 miles
(B) In my old job I enter the distance to 30 miles
A=85 miles
Subtract B=30 miles
————————————-
55 miles
If the result is at least 50 miles, you pass the distance test.
Courtesy, IRS
Members of the Armed Forces who move because of a permanent change in station may not have to pass the distance test. However, non-military related move within the United States does not qualify you for a tax deduction.
3. You meet the time test (39-weeks test)
There is a minimum amount of time that you have to fulfill to sufficiently convince IRS that you did move for your new job, and it should be a full time job at that. It should take you at least 39 weeks during the first 12 months on your arrival at the general area of your new job location.
Mind your travel expense: If your new boss does not offer to pay your moving expenses, you can ask Uncle Sam to lessen the sting of moving. For 2011, the standard mileage rate for moving is 19 cents per mile.
Proof of expenses: It is vital that you keep a copy or proof of your moving expenses such as receipts, credit card bills, checks, mileage logs, your Form W-2 and reimbursement statements from your new employer (if any).
How you do it: For qualified tax payers to avail of moving expense deductions, use the form 3903.
The self-employed and some retirees and survivors are qualified with this tax deduction even if they are not moving for another location regarding a new job. See the IRS Publication 17 for more info.
Source: IRS Publication 521, Moving Expenses