Moving Expenses

Tax-deductible expenses than occurs as a result of relocation of an employee with his family due to new job or location transfer of an existing job are known as moving expenses. Subsequent to meeting certain criteria of time and distance, individuals will be able to deduct qualifying expenses after beginning the new job. Cost needed for packing and transporting household goods and personal property, cost for travel and lodging are included in qualifying expenses. During the move, Internal Revenue Service (IRS) helps in deducting certain expenses from your taxes, if you meet some criteria. If your employer is covering the expenses related to you relocation, there won’t be much expenses for you. Meals are not deductible as moving expenses. Employer may either pay or reimburse employees moving expenses without taxing the costs of relocation. It is necessary to create a purchase order and to fill out Travel expense Voucher to arrange reimbursement for new employees. While relocating the individual is supposed to have a file of moving expenses and there are some limitations in the distance  from old home as well as time limitation for remaining in the new job.

Relocation Reimbursement

Once the employee is relocated to his new residence, then he can start his reimbursement procedure by submitting a local Funds Voucher through his department to the Payroll office. The employee is supposed to include a copy of his offer employment letter specifying the relocation amount offered to him, original receipts, employee signature and account signer with Approval Authority. Unreasonable expenses like side trips, extended stays and lavish lodging while moving to new home is not included in reimbursements. But the employee can claim for moving expenses like travel, lodging, pre-move house hunting and temporary house.

Deductible moving expenses

IRS has some list of deductions allowed.  The cost of packing and transporting household goods and personal effects are fully deductible. Cost to connect and disconnect utilities, cost of transporting your cars and the cost for personal belongings are included in deductible list. Deductions are allowed for you for only one trip. If you travel by car, expenses for gasoline, oil, lodging, parking fees and tolls will be deducted. Travelling expenses from older residence to new one is reimbursable. The actual cost of transportation and lodging occurred during the whole process of relocation are eligible. Based on IRS Guidelines travel reimbursements are made.  The cost of storing your belongings for 30 days once relocated is also a deductible expense.

Questions:

• Define moving expenses?
• What is relocation reimbursement?