This isn't Kansas anymore...or is it?

With this article, we celebrate L. Frank Baum, and Judy Garland, et al, since this month is the anniversary of the release of the original film “The Wizard of Oz”   -- the premiere was on August 17, 1939 in New York City. Dorothy had quite a move, didn’t she?

We know what happened to Dorothy, but what about you? How does relocating affect your tax status?

Let’s say that you’re looking for a new career challenge, and your current position and company don’t have much to offer. So you start to look outside your company, your town, and maybe even the state you currently live in. However it happened, the “wanderlust” is upon you. You mail employment histories, complete interviews and are offered two positions. But wait, both jobs are so far away!

Does it really make financial sense to commute?   Probably not.  Could it pay for you to move?  Maybe.  The IRS allows you to deduct many expenses of moving to a new locale to take a new job (or even to take the same job in the same company, but at a different location). 

You’ll need to meet a few tests to see if you qualify for special deductions. Here’s how it works:  

• TIME - If you start a new job in a new location, you’ll need to move to your permanent residence within one year of starting the position. 
• DISTANCE - This one’s a little tricky.  It starts with your former residence.  If you worked seven miles from your old home, then your new “office” must be 57 miles from your old home.  That’s right, from your OLD home. 
• MORE TIME - This is the amount of time you actually work in the new area.   You have to work for 39 weeks of the first 12 months after your arrival at your new home, AND you have to work a total of 78 weeks during the first two years.  This does not mean that you have to wait two years to claim your moving expenses. It does mean that if you leave the area, you’ll have to “pay back” the deductions to Uncle Sam.  

So, what’s deductible? Transportation of persons and goods, using the shortest, most direct route between the two locations. In other words, you can’t go from Baltimore, MD to Charlottesville, VA via Tampa, FL and deduct related costs. 

Actual gas/oil for the trip, OR the standard mileage rate; parking and tolls for the trip (keep your receipts!); packing, crating and transporting goods to your new home; connection/disconnection of your utilities, Internet, etc.; lodging during the move. If you move cross-country and drive to get there, you can deduct motel stays for you and your family – but not meals).

What if your employer pays for a portion of your moving expenses?  If that’s the case, the reimbursement will be shown in box 12 of your W2.  Where to report all of this?  You do this on Form 3903.  Of course, since you are already fed up with unpacking boxes, and don't want to deal with IRS Forms, we would be happy to help you figure out how to maximize the Moving Expense.  

Don’t let the Wizard of Oz lead you astray! Follow the Yellow Brick Road to your local PRO-TAX office. You will find experts there with real brains and real hearts. Or you can call us at 1-800-809-2829. Click here  for a guide to our locations.

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