Are you planning on moving soon? It’s a big undertaking, but it can also be a great opportunity for a fresh start. Whether you’re moving for work or just for a change of scenery, there are a lot of expenses that come with relocating. But did you know that some of those expenses are tax deductible?
That’s right, you may be able to claim some of your moving expenses on your taxes and get a nice little deduction. Here’s a breakdown of 14 common tax-deductible moving expenses you should be aware of.
Reminder: Be sure to consult with a tax professional or refer to the IRS website for more information.
Transportation costs
Whether you’re driving your own car or renting a moving truck, keeping track of your transportation expenses is essential. You can deduct the actual expenses of transporting yourself and your belongings to your new home, or you can choose to take the standard mileage rate. The standard mileage rate for moving in 2022 is 18 cents per mile, which means that you can deduct 18 cents for every mile you travel during your move.
It’s important to note that the transportation expenses you can deduct only apply to your move from your former home to your new home. If you make any side trips or detours during your move, those expenses are not tax-deductible.
Storage costs
The IRS allows you to deduct the cost of storing your household items if you need to store them for a short period of time as part of your move. This can include the cost of renting a storage unit, as well as any fees associated with the storage facility, such as insurance or security deposits.
To qualify for this deduction, the storage must be necessary to your move and must occur within a reasonable amount of time before or after your move. It’s important to note that this deduction only applies to storage that is related to your move, not for general storage purposes.
Be sure to keep track of the dates and length of time that you used the storage facility, as well as any fees or deposits you paid.
Moving supplies
Moving supplies are an essential part of any move, and the cost of these supplies can add up quickly. Luckily, the cost of these supplies is tax-deductible, which can help you save money. This includes items such as boxes, tape, bubble wrap, packing paper, and any other supplies needed to pack your belongings.
When it comes to deducting moving supplies, it’s important to keep track of all your expenses. Save your receipts and make note of what you purchased, the date of purchase, and the cost. This will help you accurately calculate the amount you can deduct.
Professional moving services
The cost of hiring professional movers is also deductible, making it a great way to save money on your move. This includes not only the cost of the moving company’s services but also any additional fees, such as fuel charges or packing supplies. Be sure to keep all of your receipts and invoices from the moving company so that you can claim these expenses when it’s time to file your taxes.
Utility disconnection and reconnection fees
When moving, it’s common to need to disconnect and reconnect your utilities, such as electricity, gas, and water. These services often come with fees for disconnection and reconnection, which can add up quickly. However, the good news is that these fees are tax-deductible. You can deduct the cost of disconnecting and reconnecting your utilities, which can help offset some of the costs of your move. Make sure to keep any receipts or documentation related to these fees, as you’ll need them to claim the deduction on your tax return.
Lodging during the move
If your move requires you to stay in a hotel or temporary housing, you may be eligible to deduct those expenses from your taxes. The IRS allows taxpayers to deduct the cost of lodging during a move as long as it’s for a reasonable amount of time. Generally, this means the lodging must be for one or two nights and you can only deduct the cost of one room for yourself and your family.
It’s important to keep detailed records of your lodging expenses, including the dates of your stay, the name and location of the hotel or temporary housing, and the cost of the room. You’ll need to provide this information when you file your taxes to claim the deduction.
Insurance for the move
To ensure that your belongings are covered, you may choose to purchase insurance for your move. The cost of this insurance is deductible on your tax return. This insurance policy can cover your belongings from the time they leave your old home until they arrive at your new home. If you’re moving long-distance or have valuable items that need extra protection, purchasing insurance can give you peace of mind knowing that you’re covered in case of any unexpected incidents. Be sure to keep all receipts and records of the insurance premium paid to claim this deduction.
Moving from a storage unit
Moving from a storage unit can be a smart way to save money and reduce the hassle of moving everything at once. Luckily, if you do decide to move your belongings from a storage unit to your new home, you can deduct the cost of the rental. This can include any fees associated with renting a truck or other moving equipment to transport your items.
To make sure you can take advantage of this deduction, keep track of all receipts related to the rental of the storage unit and any associated moving costs. Make sure to keep a detailed record of the dates and times that you used the storage unit and for what purpose. Additionally, be sure to save any paperwork related to the rental, such as contracts or agreements.
Remember that you can only deduct the cost of the rental and any associated moving costs if you are moving your belongings from the storage unit to your new home. If you are using the storage unit for any other purpose, such as for business or personal storage, you will not be able to claim this deduction.
Moving for work
If you’re relocating for a new job, you may be able to deduct some of the costs associated with the move on your tax return, even if your employer doesn’t reimburse you for them.
To qualify for this deduction, you must meet two criteria: first, your new job must be at least 50 miles further away from your old home than your old job was, and second, you must work full-time in your new job for at least 39 weeks in the first year after your move.
If you meet these criteria, you can deduct a wide range of expenses related to your move, including transportation costs, lodging, and storage. You can also deduct the cost of moving your household goods and personal belongings, as well as the cost of moving your pets.
One important thing to note is that you can only deduct expenses that are not reimbursed by your employer. If your employer covers some or all of your moving expenses, you may not be able to deduct them on your tax return.
However, if you paid for expenses that your employer didn’t reimburse you for, you can deduct them on your tax return. Make sure to keep careful records of all expenses related to your move, including receipts, invoices, and other documentation, to ensure that you can take advantage of all available deductions.
Travel expenses
When you move long distances, you may incur travel expenses like airfare, train tickets, and rental cars. These expenses are tax deductible. If you drive your own vehicle to your new home, you can also deduct the standard mileage rate for the distance traveled. Keep in mind that only the expenses related to moving yourself and your household items are deductible. Any expenses related to sightseeing or vacation activities during your move are not eligible for deduction. To claim this deduction, you need to keep track of all your travel expenses, including receipts and mileage logs.
Home sale expenses
If you’re moving because you sold your home, you may be able to deduct some of the expenses associated with the sale. These expenses include real estate agent fees, advertising costs, legal fees, and inspection fees. It’s important to note that you can only deduct these expenses if you’re selling your primary residence and not a second home or investment property.
The deduction for home sale expenses is taken on Schedule A of your tax return as a miscellaneous itemized deduction. However, it’s subject to the 2% adjusted gross income (AGI) limitation, which means that you can only deduct the portion of your expenses that exceed 2% of your AGI.
To claim this deduction, you’ll need to keep all receipts and documents related to the sale of your home. It’s also important to keep in mind that there are certain rules and limitations that apply to this deduction, so it’s a good idea to consult with a tax professional to make sure you’re following all the guidelines correctly.
Loss on the sale of your home
If you sell your home for less than what you paid for it, you may be eligible to deduct the loss on your tax return. This applies to homes that were sold at a loss, not those that were sold for a profit. However, the loss can only be deducted if the home was your primary residence and not a rental property.
The IRS calculates the loss by subtracting the adjusted basis of the home from the sale price. The adjusted basis includes the original cost of the home plus any improvements made minus any depreciation taken. If the result is a negative number, that is the amount of the loss.
It’s important to note that there are limits on the amount of loss you can deduct. The maximum deductible loss is $3,000 per year, and any remaining loss can be carried forward to future tax years until it’s fully used up.
To claim the loss on your tax return, you’ll need to fill out IRS Form 4684, which is used to report casualties and thefts. The loss is then transferred to Schedule A, which is used to itemize deductions.
It’s always best to consult with a tax professional to determine if you’re eligible for this deduction and to ensure that you’re claiming it correctly on your tax return.
Real estate commissions
When you sell your home, you’ll likely be working with a real estate agent to help you find a buyer. The agent’s commission is usually a percentage of the sale price, and it can add up to a significant amount. The good news is that you can deduct those expenses from your taxes.
To claim this deduction, you’ll need to have a record of the commission paid to your real estate agent. This information should be included in the closing documents you receive from the sale of your home.
It’s important to note that you can only deduct real estate commissions related to the sale of your primary residence. If you sold a second home or investment property, the commissions paid may be considered a cost of doing business and should be deducted on a Schedule E form.
Mortgage penalties
When you’re planning to move, there are a lot of expenses that can quickly add up. Fortunately, the good news is that some of these expenses may be tax deductible. One such expense is mortgage penalties. If you had to pay a penalty for breaking your mortgage early due to the move, you can deduct that penalty on your tax return.
The deduction for mortgage penalties can be a huge relief for those who have to move unexpectedly or have to break their mortgage early for some other reason. It’s important to note that not all mortgage penalties are tax deductible. Only penalties that are incurred as a result of a move due to work or business reasons are eligible for the deduction.
To claim this deduction, you’ll need to keep detailed records of the penalty and provide documentation to support your claim. You may need to provide a copy of your mortgage agreement, as well as receipts or other proof of payment for the penalty. It’s also a good idea to consult with a tax professional or financial advisor to ensure that you are claiming the deduction correctly and in accordance with IRS guidelines.
If you qualify for the mortgage penalty deduction, it can help to offset some of the expenses associated with your move. It’s always a good idea to take advantage of any available tax deductions to help make the most of your money and reduce your tax liability.
Moving can be a costly endeavor, but knowing what expenses are tax deductible can help ease the burden. Be sure to keep all of your receipts and consult with a tax professional to ensure that you’re maximizing your deductions. Good luck with your move!
