Posted by: irene | December 16, 2009

Tax Deductions when you move

There are a number of receipts that you will want to save when you move to our Valley of the Sun.  (You can save them if you move somewhere else too)  In ALL cases, I strongly suggest that you CALL YOUR ACCOUNTANT or CYA as I shall abbreviate it.  I am not a CPA or a tax advisor,  I am sharing information that is available online that may be helpful to you as a prospective home buyer.  I have listed the IRS publications that reference the deductions I am mentioning. The main IRS site is:  http://www.irs.gov

Enter the topic “moving expenses” and start reading.

With the changes in the tax law in 1997 if you are single and sell your home you may now claim up to $250K of profit (capital gains) tax-free.   If you are married, filing jointly, you can claim up to $500K.    You have to meet a few conditions, for one you must have lived in the house for two of the past 5 years, and it must have been your principal residence. For deviations and details, read the info in the IRS publication #523.  No more do you have to buy a more expensive home than the one you are selling, no more keeping records since that first home you bought!!  Now you can sell your huge family home and move into a one bedroom condo if you choose, and not have a penny tax to pay as long as you meet the IRS requirements!!   What a great retirement fund some folks are able to build with that law!  In my opinion, this was truly one of the biggest and best tax reforms that has ever been passed.    The temptation to move every two years in this market is hard to resist.

This change eliminates the need for most people to keep track of the expenses in preparing their home for sale and the costs of selling.   If you are over that $250K or $500K gain mark then you have a different set of rules for what is taxable, CYA and check out the IRS pub #523.

Before you can use your moving expenses you must meet some mileage, time and job requirements, be certain to read the IRS pub #521 and form 3903.  If you are moving from overseas or with the military, you have a whole different set of rules that you must operate under, too complex to even mention here, do Call Your Accountant!

If you meet the requirements Uncle has set, then here are some things to think about. .

Your car can be shipped and it becomes a moving expense!  No need to make that drive with walkie-talkies and cell roaming charges. If you do drive, your actual car expenses, or most of them at least, are deductible.  Don’t really want that loveable Great Dane in the backseat for 2 days?  His flight out is deductible!!  You and all of your family do not have to travel together either!  Read all the fine print about where you enter each deduction and what to do if your company is reimbursing you. You can deduct all of the packing, crating and shipping of your household goods, plus 30 days of storage after things are shipped.  You can deduct the cost of moving your goods from storage as well as your home too.  But, better not go furniture shopping on the way, that shipping is not covered.  Lodging for one day after they move your furniture out of the house and while traveling is covered. Meals are not covered.  Side trips to visit Graceland or Disney are not deductible.  Read publication #521 a couple of times, and be certain you Call Your Accountant about anything you are unsure of!! Oh and remember to notify the IRS of your new address on their form 8822 as soon as you move.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

Categories

%d bloggers like this: