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Tax help: Tax deduction for moving expenses

Moving to a new homeinvolves a lot of planning and work, and it can be costly as well. If you are moving because you got a new job, or your current job changed location, you may be able to deduct your reasonable moving expenses on your income tax return.

NOTE: The moving expenses tax deduction is an “above-the-line” deduction, which means it is taken before your AGI (adjusted gross income) is calculated, instead of after, like most other deductions. Above-the-line tax deductions are subtracted from your gross income and the resulting number is your AGI. Therefore, above-the-line deductions apply whether you itemize or not. Above-the-line deductions, like the moving expenses tax deduction, are designed to help protect your personal exemptions and itemized deductions from phaseouts. Because of these characteristics, above-the-line deductions are often considered to be the most beneficial for taxpayers.

Who Can Deduct Moving Expenses — Tests for Eligibility

In order to be eligible to claim the moving expenses tax deduction, the IRS has three main requirements that you must meet:
• Your move is closely related to the start of work
• You meet the distance test
• You meet the time test

Move Related to the Start of Work

In general, you are allowed to deduct moving expenses that you incur within one year from your first day of work. Your move must be closely related to both the location of your new job and the time you start the new job. According to the IRS, your move is considered to be closely related in place as long as “the distance from your new home to the new job location is not more than the distance from your former home to the new job location.” Your home refers to your principal residence, which can be a house, condominium, apartment, mobile home or other similar dwelling.

READ: Important tips to help you achieve your financial goals

The Distance Test

To qualify for the moving expenses tax deduction, your new job location must be at least 50 miles farther from your old home than your old job location. If you did not have a former workplace, your new job location must be at least 50 miles away from your old home. The IRS states that the distance should be determined by using the shortest of the most commonly traveled routes (so you won’t be able to use the scenic route just to meet the mileage requirement).

The Time Test

To be eligible for the moving expenses tax deduction, you must also work full-time for an employer in the vicinity of your new job location for at least 39 weeks during the year following your move. It’s important to note that these weeks do not have to be consecutive or with the same employer, so you are free to change jobs after you move. There are also exceptions for disability, death, involuntary separation, and other special situations. Additionally, if your employer transfers you or fires you after you move, the IRS will overlook the 39-week requirement.

Deductible Moving Expenses

With the moving expenses tax deduction, you are allowed to deduct the non-reimbursed cost of moving household goods and personal belongings to a new residence. This can include the cost of transportation, packing, unpacking, storage-in-transit, and valuation. Note that each qualified expense is limited to 30 days — for example, you can deduct the cost of renting a storage unit for up to 30 days (if you cannot move into your new home right after leaving your old residence).

Moving expenses that qualify for this tax deduction include the following:

  • The cost of shipping automobiles and boats
  • The cost of transporting household pets (including dogs, cats, tropical fish, etc.)
  • The moving-related cost associated with connecting and disconnecting utilities
  • The cost of moving personal belongings from a place other than your old residence (such as a summer home or relative's home), but not exceeding what it would have cost to move them from your old residence
  • The cost of lodging (for you and other members of your household) while traveling to the new residence (but not the cost of meals)

READ: How to manage your digital afterlife

Make sure you keep track of your moving receipts so you can take advantage of the moving expenses tax break.

NOTE: You cannot deduct any moving expenses that are paid for by your employer — that means any costs covered by reimbursements from your employer. Additionally, keep in mind there are special rules for the moving expenses tax deduction if you are self-employed, married filing jointly, or a member of the armed forces.

Claiming the Moving Expenses Tax Deduction

To claim this tax deduction, your moving expenses should be figured on IRS Tax Form 3903 (Moving Expenses) and deducted as an adjustment to your income on IRS Tax Form 1040 (U.S. Individual Income Tax Return). Attach Form 3903 to the 1040 Form that covers the year in which you moved. You do not have to complete or submit a Schedule A to claim the moving expenses tax deduction.

According to the IRS, you should not file Form 3903 if all of the following apply:
• You moved to a location outside of the United States in a previous year.
• You are claiming only storage fees while you were away from the United States.
• Any amount your employer paid for the storage fees is included as “wages” in Box 1 of your IRS Tax Form W-2.

For More Information

For more information about the moving expenses tax deduction — including deductible and nondeductible expenses, special rules, and moves to locations outside the United States — please see IRS Publication 521 (Moving Expenses).

Elizabeth Rosen grew up near Boston and comes from a family of financial planners. She attended Carnegie Mellon University in Pittsburgh, Pa. where she studied professional writing. After graduation, Elizabeth moved to San Francisco where she worked for several years as the senior writer/editor and content manager for an online company. She now lives in Los Angeles working as a financial writer for numerous websites and print newsletters.

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  • Congressional Republicans left Capitol Hill late last week excited about the prospects for sweeping legislation which would deliver tax cuts and tax reform, as with approval of a House tax bill, the focus has shifted to the Senate, and whether GOP leaders can muster the needed votes to approve a slightly different GOP tax measure after Thanksgiving. “This bill gives Americans more take home pay by cutting taxes and preserving deductions for home mortgage interest and charitable contributions,” said Sen. Bill Cassidy (R-LA) – while he’s on board, only a handful of GOP Senators are expected to determine the fate of this legislation. Here’s where things stand on Capitol Hill: 1. Remember, there is more to do than tax reform. Yes, Republicans want to get tax reform done by the end of the year. But there are other measures which will need attention as well after the Thanksgiving break. For example, the Children’s Health Insurance program needs to be reauthorized, and has been in limbo since October 1. A temporary federal budget runs out on December 8, and there still hasn’t been a deal announced on how much Congress will decide to spend on the discretionary budget, which is what funds pretty much everything outside of mandatory spending items like Social Security and Medicare. There had been talk earlier this year of a possible government shutdown showdown, but that seems unlikely right now, because it would really get in the way of GOP efforts on tax reform. House Speaker Paul Ryan still wants all that spending work – a giant omnibus funding bill – done by the end of the year. House Speaker Ryan: Don't intend on stopgap government funding into next year. — DailyFX Team Live (@DailyFXTeam) November 14, 2017 2. A rush of spending seems likely. In order to get a deal on the discretionary budget for 2018, it’s expected there will be a sizeable increase in defense spending in any final spending deal for next year – President Trump had asked for $54 billion in extra military funding, but there’s no sign of any budget cuts to immediately offset the cost of that. Not only is that extra money likely to be approved, but a third hurricane disaster relief bill seems likely to be voted on by Congress in December as well. The latest White House request was for $44 billion, much less than what Texas, Florida and Puerto Rico have asked for in terms of hurricane aid. That would make total aid close to $100 billion just this year. In the latest disaster aid plan, the White House for the first time is seeking offsetting budget cuts to pay for some of that extra spending. The plan unveiled last Friday has $14 billion in cuts now, and another $44 billion in cuts later – later, as in between 2025 and 2027, after President Trump is gone from the Oval Office. White House wants $44 billion in hurricane relief, offers some cuts now, more in 2025-2027 https://t.co/wg7ggSUI0C — Jamie Dupree (@jamiedupree) November 17, 2017 3. Some Senators to watch on tax reform. When lawmakers return to legislative sessions the week of November 27, the main political game on Capitol Hill will be figuring out where everyone stands on the GOP tax reform bill in the Senate. This is a similar scenario to what went on with Republicans on health care reform, and many of the same players are involved. On the bubble right now would be Sen. Susan Collins (R-ME), Sen. John McCain (R-AZ), Sen. Bob Corker (R-TN), Sen. Lisa Murkowski (R-AK), and Sen. Jeff Flake (R-AZ). Also, Sen. Ron Johnson (R-WI) has said he wants major changes on how small businesses and pass through businesses are dealt with. Don’t count the bill out yet, but there is a lot of work to do. And one thing is for sure – someone will be watching them very closely. Republican Senators are working very hard to get Tax Cuts and Tax Reform approved. Hopefully it will not be long and they do not want to disappoint the American public! — Donald J. Trump (@realDonaldTrump) November 20, 2017 4. Some items you probably won’t see in 2017. One item that won’t be acted on this year is an infrastructure bill. President Donald Trump has talked about his grand $1 trillion infrastructure program since the 2016 campaign, but at this point, there is still no detailed plan, and there is no bill in the Congress. On immigration, there’s still lots of talk about wheeling and dealing on DACA and border security, but I’m not sure there’s the political will to do that. Don’t look for funding for the border wall, but instead for something that sounds like border security, but isn’t the wall. With tax reform dominating the agenda, don’t look for anything on DACA until 2018. DACA: 3 whole months left to come up w/something. Of course there is also Thanksgiving; Christmas: New Years; etc…..no pressure. — David Gee (@CurtG345) November 18, 2017 5. One issue that has disappeared – the deficit. It used to be that Republicans were all about reigning in spending, and cutting the size of government. Now that they have had control of the House, Senate and White House, they are poised to, to, to, do nothing in 2017 on that front. The budget doesn’t balance for at least ten years (if not more), there were no major spending cuts enacted by the Congress, there was no appetite for savings in mandatory spending programs, either. The cuts included in the President’s budget have pretty much been ignored by lawmakers, and it took the White House three disaster aid bills before any offsetting budget cuts were proposed. Meanwhile, the yearly federal deficit is trending back up, and with the disaster relief bills, and an increase in the federal budget caps, there will be more red ink in 2018. Only a few Republicans have stuck with their familiar call for budget discipline. Rep. Walter Jones (R-N.C.) on adding $1.5 trillion to the deficit: “If this was a Democratic bill we wouldn’t even be voting for it. That’s how hypocritical this place has become.” https://t.co/H5FduNppVH — MainStream Coalition (@ksmainstream) November 17, 2017
  • A national group is speaking out about Norman High School apparently violating the separation of church and state before a football game. The group Freedom From Religion Foundation claims they have received a complaint from a parent stating the football team and coaches prayed before a game. Chris Line is an attorney for the group and says, 'There could be a member on the team who doesn't agree with this Christian prayer that goes on, and they're not going to speak out about it.' School officials tell us they are looking into the complaint. Do you think the school should get in trouble if this is true?
  • We have good news if you have outdoor plans for your Sunday. National Weather Service Meteorologist Robert Darby says it will be a whole lot less windy and the sun will come out to play. “It should be a fairly mild day with sunny skies,” Darby said.  “Temperatures will be near 60.” The low Sunday night will drop to around 37 degrees. Temperatures will continue to rise on Monday.  NWS reports sunny skies and a high around 64 degrees.  
  • As the House voted along party lines on Thursday to approve a sweeping package of GOP tax reforms, one peculiar part of the floor debate came when a number of Republicans – who voted for the bill – took to the floor to request changes in the their party’s plan, as some highlighted unintended consequences, while others objected to the basics of the measure. Known in parliamentary parlance as a “colloquy,” the scripted exchanges between lawmakers are often done to clarify the legislative intent of a bill, or in this case, to urge action in a specific way in House-Senate negotiations. And for some Republicans in this week’s tax reform debate, it was clear they wanted some provisions altered. Some requests were specific, like Rep. David McKinley (R-WV), who made the case for historic preservation tax credits, which were eradicated by the House GOP tax reform bill. “Without the credit, projects that transform communities in all 50 states, from West Virginia to Texas, to Wisconsin, simply will not happen,” McKinley said on the House floor, as he asked for Brady’s word that he would help reverse the decision. That didn’t happen. “I commit to working with him and continuing to work with him on this issue because I know the importance of it,” Brady responded, making sure not to guarantee anything in some of these floor exchanges. For Rep. Carlos Curbelo (R-FL), a staunch advocate of the GOP bill, he asked the Chairman of the House Ways and Means to do more in terms of tax help for the people of Puerto Rico, whose island was devastated by Hurricane Maria. “I look forward to working with you on ideas to best serve the people of this island,” said Rep. Kevin Brady (R-TX), who thanked fellow GOP lawmakers for their concerns, but made no promises. For Rep. Andy Barr (R-KY), the issue was with a new excise tax from Republicans that would be levied on the endowments of private colleges and universities. Barr said that would harm Berea College in his district, a ‘work college’ that uses its endowment money to pay the tuition of all students. It was noted in press stories back home. Barr Fights for Berea College in Tax Reform Bill – https://t.co/YoBgs5CWvp – — BereaOnline.com (@bereaonline) November 16, 2017 “I was pleased to learn that the Senate version of the bill exempts schools with fewer than 500 tuition-paying students from the excise tax,” Barr said, urging Brady to accept that position in any House-Senate negotiation. Brady said he would try. “Mr. Speaker, we will work together for a mutually accepted solution to make sure we exempt work colleges to use their endowments to provide tuition-free education,” the panel chairman responded. For Rep. Don Young (R-AK), the problem he brought to the House floor was under the heading of unintended consequences, as the GOP tax bill would subject native settlement trusts in Alaska to a higher rate of taxation. “This would make it more difficult for Alaska Native Settlement Trusts to provide long-term benefits to Alaska Natives,” Young said on the House floor, asking Brady to include provisions of a bill to remedy that and more. Unlike some of the other requests, Brady acknowledged that the GOP tax bill would “unintentionally” change the tax rate for the Alaskan settlements, agreeing to focus on this in conference as we finalize individual rate structures between the House and the Senate.” Others weren’t so lucky to get a guarantee of action, as they pressed for changes in maybe the most controversial part of the GOP plan, which limits a deduction for state and local taxes. “I am concerned about its impact on some of my constituents in Maryland who pay high state and local income taxes,” said Rep. Andy Harris (R-MD), the only Republican member of the House from that state, which would be one of the biggest losers on the SALT issue. That subject also drew two California Republicans to make the same appeal to Brady later in the debate; Rep. Mimi Walters (R-CA) and Rep. Steve Knight (R-CA) echoed the concerns of Harris – all of them got a murky assurance of help. “I am happy to commit to working with both of them to ensure we reach a positive outcome for their constituents and families as we reconcile our differences with the Senate,” Brady said, making no promises. Other Republicans brought up education, and a provision in the GOP tax reform bill that would hinder colleges and universities from providing tax free tuition waivers and reimbursements, a matter that has drawn more and more attention in recent days. Rep. Mike Turner (R-OH) – whose district includes Dayton University – and Rep. Rodney Davis (R-IL) – whose district includes the University of Illinois – both appealed to Brady to make a change. “I believe that an unintended consequence of this bill would hinder middle class Americans pursuing a higher education degree in an attempt to better their lives,” Turner said. “I am worried it is going to have an impact on the custodians and the assistants in the Registrar’s Office who are just working at these institutions to be able to send their son or daughter to college,” said Davis. There was no guarantee that the provision would be changed. “I have a keen interest in this issue,” Brady told Turner and Davis. “I will work with you toward a positive solution on tuition assistance in conference with the Senate.” Democrats noted the exchanges on both days of the House tax reform debate, arguing that it showed off the haphazard nature of how the bill was put together. “I also was intrigued by the colloquy where Members came to ask the leadership if they will work with them to take out egregious elements of this tax proposal,” said Rep. Dan Kildee (D-MI). “We get this sort of, “Yes, I will work with the gentleman,” answer,” Kildee added, raising his voice on the floor. “Why did you put it in in the first place?” Kildee yelled. “Why are you cutting historic tax credits in the first place? Why did you put it in in the first place? You just wrote the bill. You just wrote it,” he said. GOP lawmakers said this past week that anyone can find a reason to vote against a big bill like this tax reform plan – we’ll see in coming weeks whether these publicly voiced concerns become an issue for the final version of tax reform in the Congress.
  • We have updated information regarding a Tulsa homicide Friday night near East 36th Street and South 137th East Avenue. Police tell us Phazon Scott surrendered to investigators around 9:45 p.m. He will be booked into the Tulsa County Jail for first-degree murder. The unidentified 40-year-old victim was found fatally shot inside a house around 6:37 p.m. “The victim wanted to talk to the grandmother about a situation at the house involving his children,” police said.   “Scott arrived and entered the house and he and the victim had an argument. During the course of the argument Scott pulled a handgun from his waistband and shot the victim.” Scott then left the scene with the gun.  He later returned to the home and surrendered.