Moving house is often an expensive process, so it's important to find ways to save money. While some people save cash by moving house without professional help, shrewd professionals know that they can sometimes take advantage of tax breaks to lessen the financial burden. Learn more about the IRS rules about house moving tax relief, and find out what you need to do to take advantage of this exemption.
Eligibility to claim tax relief
According to the United States Census Bureau, 36.5 million people moved home in the United States in 2012. With so many house moves taking place, it's easy to understand why the IRS would want to put strict rules in place about tax relief on moving expenses.
Tax relief is only available to people who move house due to a change of job or workplace location. It's in the interests of the IRS to support these people, as these house moves help tackle unemployment and boost economic growth. Nonetheless, even in these circumstances, the IRS imposes strict criteria that must apply before you can claim tax relief.
Tax relief criteria
If you move two houses down the street, the IRS will not allow you to claim tax expenses. Clearly, in this situation, your journey to work will not materially change, and it's also clear that your new job didn't really influence your decision to move house. To make things fair and transparent, the IRS uses two tests to decide when people can claim tax relief.
- Distance. The IRS says that, "your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home." Even if you had a sizable commute to your old job, your new workplace must increase the length of this journey by at least 50 miles.
- Time. You need to work full-time for at least 39 weeks in the 12-month period after you move to your new home. For self-employment, you have to work for at least 78 weeks during the first 24-month period after your move.
When it comes to the time rule, you don't have to spend the 39 weeks in the same job. You could change employers within that 39-week period, but you do still need to work full-time. To claim tax relief, the IRS may ask for evidence of employment. For people in the armed forces, the distance and time rules don't generally apply.
Other factors can influence your ability to claim tax relief. For example, if you decide to move from the United States to another country, the IRS may not allow you to claim relief on the expenses, according to the earnings you report. The IRS publishes an online tool that can help you find out if you meet the requirements for tax relief.
Expenses you can claim
If the IRS determines you can claim tax relief on your moving expenses, you can pretty much claim any reasonable costs that relate directly to the move. In all cases, you should keep all invoices and receipts, so you can respond to any questions by the IRS.
Expenses you can claim include:
- Professional moving services
- Extra insurance to cover your move
- Storage costs for up to 30 days after the move
- Lodging expenses
You can also claim travel expenses, including gas, oil, parking fees and road tolls. You cannot claim the cost of any repairs or car maintenance you need as a result of the move.
Important points to note
The IRS guidelines impose restrictions on certain expenses, so it's important to make sure you don't break any of the rules. For example, you can claim moving expenses for any member of your household, but you cannot deduct any expenses that a tenant occurs, unless he or she is an employee. Similarly, if you don't keep the receipts for your gasoline, you can still claim at a standard mileage rate. Check out the rules carefully on the IRS website.
If you're moving home to start a new job, the IRS may allow you to claim tax relief on any associated expenses. For expert advice, click here to investigate or consult your accountant or a tax professional.