December 11, 2014 By King Relocation

December is about decking the halls, making things merry and bright, and enjoying the sights and sounds of the season with friends and family. But, it’s never too early to start preparing for tax season. In fact, now is a great time to get your house in order and make sure you have all of your receipts and documentation in hand, for the expenses you plan to deduct from your taxes when you file your return come January.

Did you know? If you moved during 2014 to start a new job, transferred to a new city or state with your current employer, or are even returning to the U.S to retire after working abroad, your moving expenses may be deductible on your federal income taxes.

Let’s face it, moving costs can quickly add up – from hiring professional movers to disconnecting and restarting utilities and phone service, to paying for accommodations and other expenses while in transition. So, you would probably do anything to defray those costs and put money back in your pocket, right?

If you moved and are planning to deduct these expenses from your 2014 tax return, there are a few things you should know. First of all, moving expenses are considered an “above-the-line” deduction, which means they reduce your adjusted gross income. What’s more, they can be claimed even if you don’t itemize deductions.

But, in order to make the deductions, you must satisfy two criteria in order to claim a moving expense:

• • Distance: The distance between your new job and your former home must be at least 50 miles farther than your previous workplace is from that home.
• • Time: If you’re an employee, you must work full-time for at least 39 weeks during the 12 months after you move. The weeks worked need not be consecutive, or for the same employer. If you’re self-employed, you must work at least 78 weeks during the first 24 months after moving, including at least 39 weeks during the first 12 months.

It is important to keep in mind that 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.

If you pass the “time” and “distance” tests, you then need to know which moving expenses qualify for anIRS deduction, and which ones don’t. Some of the qualifying expenses include:

• • Costs associated with packing and transporting household goods, personal effects, pets and vehicles. This includes fees paid to professional packers and movers.
• • The cost of moving personal belongings from a location other than your old residence (such as a summer home or a relative’s home), is limited to the amount it would have cost to move them from your previous home.
• • Fees to disconnect and/or connect utilities at either end of the move.
• • Travel costs for you and your family (by the most direct route available by conventional transportation) to your new home, including one day’s lodging along the way. Note that meals cannot be charged.
• • Use of your vehicle during the move, either by claiming actual expenses, or by claiming the standard mileage rate of 24 cents per mile. For either method, you can add parking fees and tolls.
• • Storing and insuring your possessions for up to 30 days after they leave your former home but before being delivered to your new home; for example, if there’s a lag before you can move in.
• • You may deduct expenses regardless of whether you’re moving within, to or from the U.S., although special rules for calculating moving expenses outside the U.S. apply. See IRS Publication 54 for details on foreign moves.

Some of the expenses that do not qualify for an IRS deduction include those associated with buying and selling a home; loss on the sale of your old home; charges for signing or breaking a lease; security deposits; and, storage fees.

This article is meant only to inform, and we recommend that you consult your tax professional or attorney when making deductions for relocation expenses on your tax return. The IRS provides information on their Website as to how to go about deducting these expenses from your tax return. You can also find additional guidance for this process via IRS Publication 521 and IRS Form 3903.

We know that you have many choices when it comes to your next relocation, and you can rest assured that regardless of the size of your move, or the distance you’ll be moving, King Relocation Services has the people, tools and expertise to make your next move, the best one you’ll ever make.

For more information on our services, please visit the King Companies website today. Also, don’t forget to connect with us on Twitter, Facebook and Google+ for our latest news and updates!