Today we are going to talk about moving and taxes. What effect does it have on your taxes when you move for work? Unfortunately, even though the 2018 Tax Cuts and Jobs Act is filled with lots of great stuff for individuals and businesses, one of the things that is gone now, is the deduction for moving expenses (unless you are a member of the military and meet some certain restrictions). However, as I have said many times before that does not mean that if we did not file correctly in the past that we cannot go back and fix old returns. Do not forget you have that three year window in which you can amend returns (see Video 14 - Myths of Amended Tax Returns). Therefore, I think it is a good idea to talk about what the pre-2018 laws and rules were, about moving expenses and the related deductions.
Video Transcript - Moving and Taxes
It's time to get down to the Brass Tacks. My name is Mel Sams, and I'm the managing associate of Sam's CPA. Today we're going to talk about moving and taxes. What effect on your taxes does it have when you move for work? Now unfortunately, even though the 2018 Tax Cuts and Jobs Act is filled with lots of great stuff for individuals and businesses, one of the things that you'll find that is gone now is the deduction for moving expenses. Unless you are a member of the military and meet some certain restrictions. Essentially, for most of us, the deduction for moving is now gone, in our moving expenses.
However, as I've said many times before that doesn't mean, just because it's gone now, that doesn't mean that if we didn't do it correctly in the past that we can't go back and fix that. So don't forget we always had that three year window in which we can amend returns. So if you've moved in the last three years, and that wasn't reported on your taxes, there's a good chance that you may have some money left on the table and it would certainly be worth having a CPA take a look at that to determine what you may have out there.
With that said, I think it's a good idea to talk about what the pre-2018 laws were, and rules were, about moving expenses and the related deduction. Generally the move had to be for work. You would have to move from one place to another because of your job. You couldn't just move because, "Well, I've always wanted to live in Florida and it's beautiful there, and I think I'm going to go there when I'm retired." Unfortunately, that would not allow us a moving expense deduction pre-2018.
However, if you work in Connecticut, and your employer says, "Hey, there's an opportunity in Florida. We're going to move you down to that office." Then we're talking. Then there's something there. At any rate, you typically had to move more than 50 miles away from your previous home, and your commute from work to home had to increase by a certain amount. With that said, if your commute from work to home increased more than 50 miles, or from home to work, then that would entitle us to the moving expense deduction in most cases.
One thing you have to remember too is if your employee reimbursed you for any of these costs, we can not then deduct them a second time. If we got the reimbursement, that's good enough. We don't then get a deduction on top of that. Sometimes moving expenses have been paid through a qualified plan of the employers and might be shown on your W2, and your employer may also provide you with a worksheet that breaks down the costs that they paid on your behalf.
If you meet those criteria, and you're able to deduct your moving expenses, you're able to deduct a broad range of things. The cost of the moving company to move your possessions, the cost of lodging and meals while you were traveling to your new home. You can even deduct the cost of a storage unit for up to 30 days beyond the move if you had to rent one because of something with your house not being ready, or some other circumstance that created that.
The point that I want to drive home on this is that just because the moving expense deduction is now gone, doesn't mean you may not be able to go back and amend a return to claim it. But, you need to sit down with a CPA. Look over what you have. They'll know the questions to ask. Were you reimbursed by your employer? Did you incur expenses out of pocket? Did you move a certain distance away from your previous residence? And if so, you would be then entitled to amend your return for the prior year to claim that. But remember, again, you got the three year window from the date a return was due to file an amendment.
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