Summertime is a popular season for moving to a new home. If any of your clients move because of a job, they may be able to deduct the cost of the move on your tax return. They may also be able to deduct their costs if they move to start a new job or to work at the same job in a new location. In order to deduct moving expenses, the move must meet three requirements:
1. The move must closely relate to the start of work. Generally, moving expenses can be deducted within one year of the date a taxpayer starts work at a new job location. Additional rules apply to this requirement.
2. The move must meet the distance test. The new main job location must be at least 50 miles farther from the taxpayers old home than their previous job location. For example, if the old job was three miles from a clients former home, their new job must be at least 53 miles from their old home.
3. The move must meet the time test. After the move, a taxpayer must work full-time at their new job for at least 39 weeks the first year. If theyre self-employed, they must meet this test and work full-time for a total of at least 78 weeks during the first two years at the new job site. If their income tax return is due before theyve met this test, they can still deduct moving expenses if they expect to meet it.
If taxpayers can legitimately claim this deduction, they can deduct transportation and lodging expenses for themselves and household members while moving from their old home to their new home. But they cannot deduct travel meal costs. They can also deduct the cost of packing, crating and shipping their things. They may be able to include the cost of storing and insuring these items while in transit. They can deduct the cost of connecting or disconnecting utilities. However, they cannot deduct as moving expenses any part of the purchase price of your new home, the cost of selling a home or the cost of entering into or breaking a lease. If their employer later pays them for the cost of a move that they already deducted on their tax return, they may need to include the payment as income. They report any taxable amount on their tax return in the year they get the payment. When moving, taxpayers should be sure to update their address with the IRS on Form 8822 and the U.S. Post Office. If they purchased health insurance coverage from the Health Insurance Marketplace, they may receive advance payment of the premium tax credit in 2014. It is important that they report changes in circumstances, such as a move to a new address, to their marketplace.