I moved from Nevada to Minnesota in June. I am self-employed.
Can I deduct any of my moving expenses? I moved to be in a better location for my work.
I will be travelling back to Nevada in the fall for work. What are common travel deductions and is there a limit? I will be there for nearly a month. Can I still take the deduction if the company paying for my work reimburses me? (i.e flights?)
Under the current tax code, personal moving expenses are not deductible unless you are moving under military orders. Business moving expenses are deductible, and since you are self-employed, you are moving both yourself and your business. So you are going to get some deduction on schedule C, but you must not view this as an opening to deduct your personal moving expenses under the guise of your business.
Regarding business travel, much of what you spend on the trip is deductible. The IRS has a great guide to help with the details. Two important things I'd emphasize: Keep very detailed records, and, you only get to deduct unreimbursed expenses. But here's the tricky part: The company that is reimbursing your expenses should do so under an accountable plan. If they do that, the reimbursements are not included in your 1099-NEC, which simplifies your own accounting, and relieves you of the burden of justifying those expenses if you are audited. If they include the amount of the reimbursement in your 1099-NEC, then you'll have to take the deductions yourself, and will bear the burden of proving the business need for the travel.
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Unfortunately, there is no longer federal deductions for moving expenses.
The 2017 Tax Cuts and Jobs Act changed the rules for claiming the moving expense tax deduction. For most taxpayers, moving expenses are no longer deductible, meaning you can no longer claim this deduction on your federal return. This change is set to stay in place for tax years 2018-2025.
But if you need to amend a previous return prior to tax reform, or if you serve in the active military and meet certain circumstances, you may qualify for a deduction. If neither of these describe your situation, you may still want to track your expenses because some states continue to provide a deduction on your state tax return if you meet specific requirements.
What are moving expenses?
When tallying the expenses that you plan to claim as your moving expense tax deduction, all of them must count as both reasonable and necessary to your move.
Reasonable moving expenses may include the cost of the following:
- Gas or the mileage on your vehicle
- Rental trucks
- Short-term storage
For a long-distance move, you might include the cost of lodging at a hotel on the way to your new home, but you can't deduct expenses for meals.
The IRS allots a standard mileage rate (17 cents per mile for 2020) that you can use to calculate your travel expenses. But if you prefer, you can keep up with your actual transportation costs and deduct those instead. Eligible travel costs include:
- Parking fees
Are moving expenses tax deductible?
If you moved prior to 2018 but didn't claim the moving expense tax deduction, you may be able to file an amended claim to deduct your moving expenses. Likewise, if you serve as an active-duty military member, you can claim moving deductions against your taxable income and include them on Form 3903 as an attachment to your Form 1040.
To claim these expenses as a deduction on your tax return as an active member of the Armed Forces, your move must result from a military order and permanent change of station. You can deduct your unreimbursed moving expenses for you, your spouse, and your dependents.
You can't deduct expenses that are reimbursed or paid for directly by the government. You must satisfy two additional criteria to qualify for counting these expenses as tax deductions: meeting the time and distance tests.
What is the time test?
The timing of your move must be closely related to the start of your new employment to qualify for the tax deduction. To meet this standard, you'll have to start your new job and work full time for at least 39 weeks within the first 12 months after your move.
There's an exception if you start your new job months before your family moves to the new location because of special circumstances, such as a spouse who's receiving medical care or a child who's finishing school near your old home. In this case, you can still deduct your moving expenses even though your move occurs long after your first day of work.
What is the distance test?
Another requirement involves the distance between your new workplace and your old home. To claim your moving costs, your new place of employment must be at least 50 miles farther away from your old home than your old place of employment. For example, if you lived in a home that was 20 miles away from your old job, you'll have to take a job at a new company that is at least 70 miles away from your old home to qualify for the deduction.
If you're a member of the United States military, you can claim your moving expenses regardless of the distance or employment requirements if you're making a permanent change in your military status, such as retirement or termination of service.
Do military filers use Form 3903?
Military personnel should use Form 3903 to report their moving expenses:
- Shipping and storage costs for packing and moving your household goods and personal effects go on line 1 of Form 3903
- Travel, lodging, and gas costs go on line 2
- Reimbursements from your employer for any moving expenses are reported on line 4
- Reimbursements for amounts on lines 1 and 2 that are not included in box 1 of your W-2 should also go on line 4
If your reimbursement exceeds your total out-of-pocket expenses, you won't be able to deduct your moving expenses, and you'll have to claim the excess reimbursement as taxable income. But if your personal expenses were more than the amount your employer reimbursed you, you can deduct your out-of-pocket moving expenses to reduce your taxable income.
Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. Whether you have a simple or complex tax situation, we've got you covered. Feel confident doing your own taxes.
I'm sorry for the bad news, but I hope that helps!
Thanks again for trusting TurboTax with your tax questions!
Have fun today! LloydC, Enrolled Agent
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