April 9, 2012 By King Relocation

Whether you are moving for personal or business reasons, the relocation process can be expensive. In addition to the costs associated with hiring a professional moving company or renting a truck, you must also pay to transfer, or shut off and restart your phone, cable and other utilities. If you are moving to a rental, you will be required to pay a security deposit, first and last month’s rent and other fees. For cross-country moves, there are additional costs associated with getting you, your family, your vehicles and your pets to your new location. Anyone who has ever relocated knows that simply moving from one location to the next can end up costing thousands of dollars!

Fortunately, there are ways that movers can mitigate some of the costs associated with relocation through careful planning, preparation and the help of their tax advisor. Did you move during 2011, or are you planning a move before the end of this year? With April 15 looming, now is the time to take advantage of provisions in the U.S. tax code for moving and relocation.

While we recommend that you consult your tax professional or attorney when making deductions for relocation expenses on your tax return, the IRS does provide some guidance on their Website as to how to go about deducting these expenses from your tax return.

According to IRS.gov, you must pass two “tests” to qualify for the moving expense deduction:

1) Distance Test – Your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.

2) Time Test – If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location. 

With the “time test” there are exceptions that can be made in the case of death, disability and involuntary separation. Additionally, members of the armed forces whose relocation is due to a military order or permanent change of station do not have to satisfy either the “distance” or “time” tests.

Again, we recommend that you consult your tax professional or attorney prior to deducting relocation expenses, but you can find additional guidance for this process via IRS Publication 521, which covers moving expenses, and figure your moving expenses on IRS Form 3903.

As you can see, a successful move not only takes planning, preparation, but also an understanding of the U.S. tax code! We hope that you will choose the team here at King Relocation Services for your next move!