Some tips to help ease relocation cost

Moving can be financially stressful, although the government will help you in the form of tax deductions if the need for a new home is related to your job.

Some of the financial impact of moving is obvious. You may hire moving companies phoenix, sometimes store your household possessions and certainly travel from your old home to the new one.

The costs vary with the weight of the household goods moved and the distance involved, but just the physical costs of moving possessions usually run several thousand dollars.

The Institute of Certified Financial Planners warned that you should not overlook other key costs that can be associated with moving to a new community.

One is loss of a spouse’s income.

Many moves are made because of a company transfer or a new job, but this often means that a working spouse will have to quit his or her job and seek employment in a new location. That will have a significant financial impact, especially if appropriate jobs are scarce.

In such situations, ask if your employer will pay lost-wage compensation for the spouse or for re-employment assistance such as resume preparation, career counseling, job search and the like.

Another penalty you may pay is a higher cost of living in your new community.

Ideally, the salary of the new job will compensate for the increase, but this is not always the case. Some companies will pay for the higher cost of housing, for example, so be sure to ask up front and secure a written agreement.

Buying and selling a home also costs money. The institute said you will run up legal and financing fees, commissions and other expenses involved in selling your old home and buying a new one. Or if you rent, you may have to pay your landlord to break your lease.

Again, if you’re moving because of a transfer or to a new job, your employer may help you out.

The planners said companies sometimes pay expenses associated with buying and selling homes, temporary living costs, home-finding trips, shipment and storage of household goods, and even return trips to your former location.

The Virginia Society of Certified Public Accountants said many more individuals are eligible to deduct job-related moving costs.

That change means the write-off for moving costs is now treated as an “above-the-line” adjustment to income. The CPAs said this means you now may be entitled to deductions for moving costs, even if you don’t itemize on your tax return.

Congress, however, placed greater restrictions on the types of moving expenses that qualify for a deduction.

To be eligible for a moving expense deduction, your new job location must be at least 50 miles farther from your old residence than your previous job.

For example, if your former job was 10 miles from your old residence, your new job must be a minimum of 60 miles from your old residence for you to qualify for a deduction. Before Jan. 1, 2014, the distance required was 35 miles.

It’s not just how far you travel to your new job, but also how long you stay on the job that affects the deduction.

The CPAs said the IRS requires that you be a full-time employee for at least 39 weeks during the first 12 months after arriving at the new location.

If you and your spouse are both employed and you file a joint return, either spouse could satisfy the time requirement. However, the weeks worked by both husband and wife cannot be added together to meet the time test.

That requirement is waived if you are involuntarily transferred to a new location, lose your job for a reason other than willful misconduct, or if you become disabled.

Self-employed workers are subject to more stringent requirements. If you are self-employed, you must work full time for at least 78 weeks during the 24 months after you arrive in the new area. In addition, you must work 39 weeks during the immediate 12-month period after relocating.

What if you moved last year, but haven’t met the time test by tax-filing deadline? The CPAs said the IRS allows you to claim the moving expense deduction in anticipation of meeting the time test. So if you meet the distance test but the time period is still pending, you may claim the deduction on your return for 2015.

If you ultimately fail to satisfy the time test for other than allowable reasons, you must either include the deducted amount as income in the year you fail to satisfy the test or file an amended return.

Deductible moving expenses include only the cost of moving yourself, your family members, household goods and personal effects, and the cost of travel to the new residence. As long as your moving expenses are reasonable, there is no limit to the amount you can deduct.

Although you can deduct automobile and lodging costs, you cannot deduct what you paid for meals while traveling, the cost of living in temporary quarters and the cost of pre-move house-hunting trips.

The law bars you from deducting the costs related to selling an old residence or buying a new one, but these can be used to adjust the cost basis of the home.

The CPAs said special rules apply if you receive moving expense reimbursements from your employer.

In general, when your employer reimburses you under an accountable plan for moving expenses, you are not required to report that amount as taxable income as long as the expenses would be deductible if paid directly by you.

If your employer reimburses you for nondeductible moving expenses, or if the expenses are paid under a nonaccountable plan, you must include these amounts as taxable income.

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