Fortunately, when you are moving in Houston there are two very effective ways to get reimbursed or compensated for moving costs that you are acquiring along the way.
1.) Company Reimbursement
Company reimbursement for moving experience varies from company to company and is obviously different if you are a contracted or self-employed. Typically, though, there are two ways that your company will pay your moving costs. Your company may give you tax-free reimbursements for what you could have deducted yourself, or the second option you may get from your company is a reimbursement in salary.
If your employer gives you a tax-free reimbursement, you don’t really have any responsibilities to ensure this happens properly. You just need to clear up with your employer that this is the way they will be reimbursing you. If this is the route your company takes, the expenses should not be included in your wages. The amount of the reimbursement you are receiving from your company should show up as a miscellaneous nontaxable item on the W-2 form that your employer sends you. You shouldn’t have to fill out any extra tax forms if your employer handles it this way.
If your employer adds the reimbursement of your moving expenses to your salary, then you will have an extra step, you will need to fill out Form 3903 to get your deduction.
You will be able to deduct only what the IRS allows, no matter how much your employer gives you. If your company is more generous than the IRS and compensates you and your family for extras like meals and/or temporary housing, then you will have to pay income tax on that money.
2.) Moving Expense Tax Deductions for Houston Movers
You qualify to deduct the most expensive items on your moving list if your move is because of a job change or transfer. Whether you are a homeowner or renter, these expenses are deductible for you. You also qualify whether you get transferred by the company you work for, stay in the same field of work or if you move into a completely different career.
You must meet this specific criteria if you want your moving expenses to qualify as deductible on your federal tax return:
Your move must be closely related to the start of work at a new job location. Usually, what this means to the IRS is that your move must be within one year of starting work. This means you will be able to move to a new location before you start your new job and still find yourself able to qualify, but there is a time limit on how long you can go before starting that new job and still finding your moving expenses tax deductible.
You need to meet the distance test. This means that the new job must be located 50 miles farther from your previous residence than your old job was from your old residence. There are several ways to get around this rule if you contact your local IRS representative they can advise you on this matter. Typically if your job is requiring your move to keep your job you will find your moving expenses are tax deductible.
You must meet the time test. The final requirement the IRS has is that you need to work at your new job at least 39 weeks out of the 12 months following your move. For any job-related moving cost to qualify as tax deductible, it has to be “closely related in time.” This is usually within a year.
You will always want to discuss reimbursement and tax deductible moving costs with your HR department or boss, and your local tax advisor. There are often many loop-holes and always very strict requirements on these matters, but the information above is a good guideline to get you started on finding ways to save money on excessive moving costs.
For more details on the qualifications for deducting moving expenses or reporting reimbursement, you can contact your local IRS department or tax advisor.