Is my relocation tax deductible?

Our nation has become a very transient society. Whether it is to find a new job, or relocating after one of the natural disasters that have taken place in certain areas, Americans are moving on a frequent and regular basis.

If you move, you may be able to deduct your moving expenses. You may qualify for the deduction if are self-employed or work as an employee in the new location, even if you do not have the job in place before you move.

This moving deduction is a very good deduction because it is a front-page deduction which means it reduces your state taxes as well as your federal taxes.

There are two tests to qualify for the moving expense deduction.

The first test is the distance test. To meet the distance test, the new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. In other words, if your old workplace was 8 miles from your home, your new workplace must be more than 58 miles from your old home to be able to qualify for a moving expense deduction.

The next is the time test. To meet the time test you must work as a fulltime employee in the new area for at least 39 weeks during the first 52 weeks after you arrive in the general area. The total number of weeks worked can be from more than one employer. If the taxpayer is self-employed in the new area, there is an additional time requirement as well. In addition to working at least 39 weeks in the first 52 weeks after you arrive in the area ,you must also work at least 78 weeks in the first two years. This additional time requirement can be fulfilled through self-employment or working as an employee.

One of the biggest advantages of the moving expense deduction is that you don’t have to itemize your deductions to claim the moving expense deduction.

Moving expenses are adjustments to income and not an itemized deduction. As such, all qualified taxpayers can take advantage of this tax savings opportunities and not just those taxpayers that itemize. In addition, because this benefit reduces your adjusted gross income, moving expenses may also assist you in qualifying for other tax benefits that are phased out at higher income levels. Also, the reduced adjusted gross income will also serve to reduce your Ohio income taxable income as well.

You can generally deduct the expenses related to moving yourself, your family and your belongings. These expenses could include professional moving company services, packing supplies, the standard moving mileage, moving help, travel expense for one trip each for you and your family members, as well as storage for up to 30 days after the goods are moved. You cannot deduct the cost of meals incurred during your move. You cannot deduct the house-hunting costs that are incurred prior to the actual move,

There are two tests to qualify for the moving expense deduction.

and you can only deduct the cost of one trip as a moving expense.

If your employer reimbursed you for your moving expenses, you cannot also deduct those expenses yourself, unless the reimbursement was included those reimbursements in your taxable income. On your W-2 form in box 12 if there is an amount with a code “P” that amount of the employer reimbursement is included in your taxable income. You should then claim a moving expense deduction to avoid paying taxes on your reimbursement. You should also claim a moving expense deduction if your employer included the reimbursement in the box 1 wage figure as well.

Properly documenting and tracking moving expenses could create substantial tax savings.

Like all income tax matters, it is the responsibility of the taxpayer to properly track and report their income so that they pay the lease amount of income taxes permissible under the tax code.