Moving’s a hassle for everyone, but in some cases the relocation costs are tax deductible.
Donald J. Trump’s family was finally reunited this weekend as his wife, Melania, and their 11-year-old son Barron moved into the White House.
There were no moving vans spotted outside 1600 Pennsylvania Avenue to let the world know of the relocation. Rather, the word came, of course, via Twitter.
This time, though it was the First Lady, not @realDonaldTrump, who let social media and the world know that the family had officially moved from Trump Tower in Manhattan to Washington, D.C.
Melania used her official @FLOTUS account Sunday, June 11, evening to share a view of the Washington Monument from the presidential personal quarters, and noted that the family is “Looking forward to the memories we’ll make in our new home!” It was hashtagged #Movingday.
Post-class family move: The transfer of the First Lady’s and Trump’s youngest son’s personal belongings to the White House came, as promised, after Barron’s school year ended.
Also reportedly on hand for the big move were Melania’s parents, Viktor and Amalija Knavs, who have been living with their daughter and grandson in Trump Tower. Her folks are frequent visitors to Mar-a-Lago, the Trump resident/private club Palm Beach, Florida, which 45 has dubbed the Winter or Southern White House.
The Knavs are expected to be regular visitors at the real White House, too, but are not expected to move in full-time.
3 moving rules: Relocation for a new resident of the White House obviously is quite different from when you and I make a move.
But the transfer of personal belongings from a prior home to a new one so the Commander in Chief can perform his new job is a good reason to look at the basic tax rules when it comes to moving.
There are three key components to claiming this deduction.
- The move must be job-related
- It must pass the distance test.
- The move and commencement of work must be within specific time frames.
Here’s a closer look at each of these moving cost tax deduction requirements.
Move must be job-related: Uncle Sam is more than happy to underwrite Americans’ mobility as long as it’s for a work-related reason, not just for a change of scenery or to be closer to friends and family.
But one good thing about deducting work-related moving costs is that your move can be in connection with an existing job, such as taking a promotion in a new city, or for your very first out of college job.
With the work connection made, then you just have to meet the distance and time requirements.
Calculating distance: Your new job comes into play in calculating what is generally the toughest moving test, that of distance.
The Internal Revenue Code demands that your new workplace be at least 50 miles farther from your previous residence than your last workplace was. For example, if you lived 15 miles from your old job, your new job must be at least 65 miles from your old home before you can deduct moving costs.
Note that, as shown in the Internal Revenue Service illustration above (click on it for a larger view), your new home’s location is immaterial. The distance tax deduction test only takes into account your old home and your job location.
The IRS also says you must figure the distance using the shortest of the more commonly traveled routes. So don’t take the scenic route getting to and from work just to ensure that it meets the 50-mile test.
Timing is everything: Getting settled can take time. Just look at how long it took (around five months) for the First Lady and Barron to get to D.C.
But when we regular taxpayers relocate and want to deduct those costs, the IRS sets a couple of time limits.
First, in order to write off relocation expenses, they must be incurred within one year of starting work at your new job.
Second, you must work full time at your new workplace for at least 39 weeks during your first 12 months there.
The good thing about the 39-week requirement is that they don’t have to be consecutive or even with the same employer.
And if you’re self-employed, the timetable is adjusted a bit. Entrepreneurs who move to a new locale must meet the year-to-move deadline and work full time at their entrepreneurial enterprise for 78 weeks during the first 24 months. Again, the worked weeks don’t have to be consecutive.
Deduction details: OK, you’ve met all the relocation deduction rules. Now what?
As with all things tax, documentation is paramount. Make sure you get and keep receipts for all moving related expenses. This includes the costs to transport your household goods and personal property, some storage costs, insurance fees, and utility connection or disconnection charges.
Even some lodging and travel expenses near your new and former homes could be deducted, along with the cost to transport a vehicle or even a pet.
If you decide to drive your car yourself with Fido in a carrier in the back seat, you can count those miles using the standard mileage rate. It’s 17 cents per mile in 2017, but is adjusted annually for inflation.
In addition to the basic eligibility and receipt requirements, here are a few other things to keep in mind.
A few more moving/tax details: If you’re married and file jointly, only one spouse has to meet the time and distance tests. Don’t try, though, to get over the weeks worked hurdle by combining the time your husband or wife worked with those you did. They must be counted separately.
You don’t have to itemize to claim your moving deductions, but you will have to file a long Form 1040 and fill out another form. Your moving costs are an above-the-line deduction entered on the 1040’s line 26. That amount comes from what you enter on Form 3903.
In fact, if you’re thinking of moving, take a look at Form 3903 (the instructions are part of this short form) to get an idea of all that’s deductible. You also can find more on moving deductions in IRS Publication 521.
You can’t double dip. If your employer reimburses you for some or all of your moving costs, you can’t use those same expenses as a deduction when you file your tax return.
Finally, if you do deduct moving costs in anticipation of meeting all the tax tests but discover, for example, that you didn’t work enough weeks, you must file an amended tax return or include the disallowed moving expenses in your income the next tax year.
You also might find these items of interest:
- The mess, and deductibility, of moving
- Moving expenses are tax deductible, but don’t go crazy with claims
- New Year means new Carolina addresses and taxes for some NC/SC border residents