Can Moving Expenses be a Tax Deduction?

Moving expenses present excellent tax-savings opportunities. Three types of tests need to be met to obtain moving-related deductions:

Start of Work Test - the taxpayer must begin working in the new location within one year of the move, but it is not necessary that employment be optained before the move. Thus, if the move occurred on Sept. 3, 2008, the taxpayer must start the new job by Sept. 3, 2009. Certain exceptions allow the one-year period to be extended. For example, if the taxpayer delayed moving to the new location so that a child could complete the school year, the one-year period would be waived.

Distance Test 1 - the distrance from the new home to the new job location must be less than the distance from the previous home to the new job location. This rule is waived if the taxpayer spends less time or money traveling from the new home to the new job. For example, if the new home location enables the taxpayer to carpool (and carpooling was unavailable previously), the commuting costs may be less even though the distance to work has increased. This rule is also waived if the taxpayer is required to live at a new location as a condition of employment.

Distance Test 2 - a second distance test is applied to make certain the taxpayer's new job location requires relocation. This test requires the taxpayer's travel to the new job without the move to increase by at least 50 miles. Specifically, the test is met if the distrance from the old residence to the new job is at least 50 miles greater than the distance from the old residence to the old job. Note that the location of the new residence is not a factor.

Time Test - the taxpayer-employee must be employed on a full-time basis at the new workplace for 39 weeks during the first 12 months following the move. For self-employed individuals, the requirement is 39 weeks during the first 12 months and for a total of 78 weeks during the first 24 months after they arrive in the general area of the new employment.

The benefits of deducting moving expenses can be sizable, but the rules and calculations can be complicated. Consultation with a tax accountant or tax attorney is recommended.

Do you have a moving check list?

Here is one we have compiled over the years and hope it helps. If you contact us, we will be happy to send you a complete relocation guide.

Send change of address to:

• Post Office
• Charge accounts, credit card companies
• Subscriptions
• Friends and relatives
• Insurance company

Transfer bank funds, arrange check cashing in new location

Arrange for insurance covereage in new location: life, health, home, auto

Transer car title registration, driver's license, windshield sticker, and motor club membership

Notify utility companies and arrange for refunds of any deposits

Arrange for utility service in new location

Stop home delivery:  laundry, paper, change-over services

Collect copies or transfer children's school records

Collect medical, dental, and prescription histories, ask doctor and dentist for referrals, transfer needed prescriptions

Collect pet licenses, vaccinations, tags, etc.

Transfer memberships for church, clubs, civic organizations and get letters of introduction

And don't forget to:

• empty freezers, plan use of foods
• defrost freezer/refrigerator (place charcoal to dispel odors)
• have appliances serviced for moving
• make arrangements for TV, satellite, internet, and cable service
• clean area rugs and have them wrapped for moving
• plan special care needs for children, pets and potted plants

And on moving day:

• carry currency, jewelry, and important documents yourself
• double check closets, drawers, shelves to be sure they are empty
• leave all keys needed by new owner

How Do I Apply for a Texas Driver's License - new residents moving to texas, who have a valid driver's license from another state have 30 days after entry to secure a Texas license. To apply, applicants will be required to:

• Provide proof of identity.
• Provide proof of social security number.
• Provide proof of Texas vehicle registration and liability insurance.
• Pay the required fee.
• Pass a vision exam.
• Surrender your out-of-state license.

Attention Cypress residents - the best place to apply for or renew your Texas driver's license is in Hempstead. There is rarely a wait.