The costs can add up quickly when relocating with your household goods, personal items, and family. Fortunately, tax breaks are available to help offset some of the expenses associated with relocating for work. However, navigating through the tax breaks can be complex and overwhelming. That’s why this article will cover crucial tips for navigating the process and critical tax breaks available after relocation and provide.
1. Work With a Professional Mover
Working with a professional mover can not only make your relocation process smoother, but it can also help you maximize your tax savings. Professional moving companies offer various services, from transportation to handling your belongings, that may be eligible for tax breaks.
Also, a professional and registered moving company like Ramar Moving forms a lawful basis for claiming eligible tax breaks. They will also provide a detailed and valid invoice that breaks down the costs associated with your move, making it easier to identify eligible expenses. It’s essential to keep detailed records of all expenses relating to your relocation to maximize your tax savings.
2. Know the Eligible Expenses
To claim tax breaks related to your relocation, understand which expenses are eligible. Generally, costs associated with moving your household goods and personal effects, traveling to your new home, and lodging during the move may be eligible for deduction or credit. These expenses may include transportation costs, such as renting a moving truck, hiring a moving company, and disconnecting and connecting utilities.
If you need to store your belongings for a while, the expenses related to storage may also be eligible for deduction or credit. It’s essential to keep detailed records of all costs relating to your move and to consult with a tax professional to determine which expenses are eligible for tax breaks. That will help ensure you don’t miss any potential tax savings. However, there are specific criteria that you must meet, as discussed below.
3. Must Meet Distance and Time Test Criteria
The time test requires that you work full-time for at least 39 weeks during the first 12 months after your move. It’s essential to consult with a tax professional or refer to IRS guidelines to ensure you meet all eligible expense criteria.
However, there are some exceptions to the distance and time tests for specific individuals, including military officers. If you’re an Armed Forces member on active duty and move because of a permanent change of station, you don’t have to meet the distance test. Additionally, if your deployment is overseas, you may be eligible to claim moving expenses without meeting the time test.
4. Keep Detailed Records
Keeping detailed records of your moving expenses is critical to ensure that you can claim all eligible tax breaks. That includes documenting all costs related to moving your household goods and personal effects and any expenses related to transportation, storage, and utility connections/disconnections. It’s also essential to keep your employment records, including start and end dates, job location, and work hours, to meet the time test requirement.
You should keep copies of your receipts, invoices, and other relevant documents. By keeping detailed records, you can ensure that you don’t miss out on any eligible tax breaks and can simplify the tax filing process. Also, Working with professionals while moving can help protect your legitimate interest in claiming eligible tax breaks.
5. Meet Your Deadlines
It’s essential to be aware of and meet deadlines when claiming tax breaks related to relocation. In most cases, taxpayers must file their tax return for the year the move occurred by the regular due date, typically April 15th, or by the extended due date in case of an extension.
Also, taxpayers must typically file Form 3903, which helps to calculate and claim eligible moving expenses, with their tax return. Failing to meet these deadlines can result in the loss of your tax breaks or even penalties from the IRS. By staying organized and aware of critical deadlines, you can ensure that you can claim all suitable tax breaks promptly.
Navigating through tax breaks after a relocation can be complex, but taking advantage of all eligible tax breaks lawfully and legitimately is essential. By understanding which expenses are qualified, working with a professional mover, meeting the distance and time test, keeping detailed records, and being aware of deadlines, you can maximize your suitable tax breaks while avoiding potential penalties or audits from the IRS. Relocating for work can be a significant financial burden, but taking advantage of eligible tax breaks can help offset some of these costs and make your move more manageable.