Besides being stressful and requiring a lot of planning, moving to a new place also takes money. Costs for moving companies, advance deposits for your new residence, and maybe new furniture or remodeling you have in mind for your new place – all of it can strain your bank account. Whatever the reasons for your move, there is one more factor we must consider as well: taxes. We all know taxes are complex and change constantly, so it’s crucial to keep up with the latest information. Then, you may be wondering: are moving expenses tax deductible in 2021?
Percentage deductible: 100%
Eligibility:
The costs associated with transporting business equipment, supplies, and inventory typically qualify as deductible.
What Moving Expenses Are Deductible?
Suppose you do qualify for the moving expense deduction. Maybe you moved in 2021 to start a new job or to find work, or you’re active-duty military. Here are some things you need to know:
Only Direct Moving Costs are Deductible
For moves within the U.S., deductible expenses are those directly related to the move. This includes:
Travel costs for yourself and family members traveling with you
Packing and moving household goods
Turning off utilities at your old location
Shipping a vehicle
Temporary lodging while traveling to your new location
Parking costs
Storage costs for your property for up to 30 days until it is delivered to your new home
Things that aren’t deductible include:
Meals you ate on the way to your new location
Costs related to any side trips you took while traveling to your new location
Trips before your move to look for a new home
Purchasing or remodeling your new home, signing a new rental lease
Temporary lodging at your new location while waiting to move into your new home
Costs of returning to your old location after you move
Moving as a Business Owner
If you own a business and you and your business both move, then your business moving costs are deductible as business expenses. This includes costs of moving business equipment and inventory from an old location to a new one. It also includes costs for renting or buying a new business office.
If you’re self-employed and you’re moving as part of the process of starting a new business, your personal moving expenses that were related to the business move may also be deductible. To be considered self-employed, you can’t own a corporation, or work or attend school part-time. You must also meet the distance and length-of-work tests.
Special considerations:
Under President Trump’s Tax Cuts and Jobs Act, moving expenses that are not directly correlated to the move of the business are no longer deductible. All personal moving expenses are exempt.
Check out the link below for a list of other tax deductions you can claim this tax season!
What questions do you have about tax season? We are here to provide help with tax preparation, accounting, payroll management, and business formation! R&I Tax and Bookkeeping is here to help! You may contact us via our 'Contact' page at https://www.ritbsinc.com/contact. We can also be reached via phone at 253-777-1106.
All Around Moving Services Company. (2021, August 30). Are Moving Expenses Tax Deductible? (2021). All Around Moving Services Company. Retrieved January 11, 2022, from
https://www.thebalancesmb.com/depreciation-3193438
Osterhaus, E. (2021, February 1). Complete list of small business tax deductions (2021). QuickBooks. Retrieved December 16, 2021, from https://quickbooks.intuit.com/r/taxes/small-business-tax-deductions/