With unemployment rates still at all-time highs, many people simply aren’t able to find work near home. As a result, sometimes they have to face a dreaded move all the way across the country to start a new job.
TIP: When facing a big life change, use that as a reminder to check your credit score.
A reader recently asked, “Can you provide anything on deductions for a move across the country for a new job? We’re moving about 1,500 miles away. There will be a truck and expenses for gas, meals, hotel, and so on. Are these deductible for an income under $50,000?”
You betcha! In your case, you are certainly entitled to deduct the cost of the vehicle you rent, as well as the packing supplies that the nice company will sell you.
You can deduct the cost of the gasoline for all the vehicles traveling with you, or you can use the mileage rate for moving—currently 23 cents per mile. When driving 1,500 miles, getting 15 miles to a gallon, and paying $4.50 per gallon, your cost = $450. Your mileage deduction on 1,500 x 0.23 = $345. You’re better off keeping your gasoline receipts for the trip.
Consider renting a closed vehicle with very sturdy locks, and note that it’s a good idea to get full insurance on your load. Before hitting the road, take a video of the contents of your truck, trailer, and/or cars. The insurance and video costs are deductible. The camera? Not really—but you’ll still be able to use it after the move.
Deducting the cost of hotels and meals
If you need more than one hotel room, keep the records for those traveling with you, including your spouse, your children, and the friends who are helping to pack and unpack. With good records, you may even be able to deduct the cost of their gasoline or the airfare needed to send your assistants back to their home. Do some homework to prove to the IRS that this was cheaper than paying the full cost of a moving company.
The cost of the meals is not deductible at all.
There are several requirements that must be met before any of these moving expenses can be used. You need to be moving because of a job or for your business. You must move to a home that is more than 50 miles closer to your new workplace than your old home was (distance test). And you have to keep working for at least 39 weeks if you are an employee or 78 weeks out of the next two years if you’re self-employed (time test). Definitely read the rest of IRS Publication 521 before moving. It’s actually informative—and not very long.
Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.