When you buy and move to a new house, you have a long list of costs to cover. From insurance to utilities, these expenses quickly add up and take a significant portion of your budget.
But your bank account doesn’t have to absorb the hit in its entirety.
When tax season rolls around, you could use your move to give you a bigger tax return. To see if your move qualifies, talk to a qualified accountant. If your move meets IRS guidelines and specifications, you could list the following items as deductions.
1. Packing and Transportation Fees
The right moving team can save you a great deal of time and money whenever you move. With a little professional help, you can quickly and efficiently pack your belongings into boxes, load them onto a moving truck, and ship everything you own from Hawaii to California (or anywhere else in the country).
But even affordable moving companies need payment for their services.
As you prepare your home and family for your move, keep a careful tab of the money you spend on boxes, tape, blankets, packing peanuts, and similar supplies. Additionally, save the invoice your moving company provides so you have accurate records of your moving, trucking, and shipping fees. You may be able to deduct these costs from your next tax return.
2. Utility Connection and Disconnection Fees
When you move, you usually have to close or discontinue accounts tied to your old address, such as your homeowner’s insurance and your landline telephone. Some of these companies will close
or transfer your accounts with no hassle or fuss, but others may charge you fees for discontinuing their services.
Your utility companies, for example, may need to send technicians to your previous home to disconnect the power, water, or sewage, and many municipalities charge for the house call. Additionally, when you move to your new home, your new utility companies might need to perform a similar process to set up your system or turn on your gas. Often times, these businesses will charge initial application and installation fees.
Fortunately, IRS Publication 521 dictates that you can deduct the costs of connecting and disconnecting your utilities when you move household goods, personal effects, and appliances. Deductible utilities include water, gas, electric, sewer and septic, trash removal, and heating oil.
However, you should note that security systems, cable, Internet, and similar services do not qualify as utilities.
3. Travel Expenses
When you hire a reliable moving team, you can rest easy knowing that your belongings will arrive safely at their new location, no matter how far away your home may be.
Though your furniture and clothing have a reliable way to make the move, don’t forget that you and your family also have to find a way to complete the journey. Whether you travel by car, by boat, by plane, or by a mix of all of these options, your travel expenses can be tax deductible when you take the shortest, most direct route.
For example, if you travel by car, you may be able to deduct the costs of oil and gas (at the standard mileage rate of 23 cents per mile). You should also record any parking fees and tolls that you incur during the move. Similarly, if you travel by plane, you can total the cost of airfare for your family, so long as you file just one trip per person.
However, if you decide to sightsee along the way, your extra trip to a national landmark or your tour at the nearby museum won’t qualify for a deduction. Additionally, you can’t count meal costs toward your write-offs, though reasonable hotel and lodging expenses are acceptable.
4. Storage Costs
Not every move is as simple as packing a few boxes from one home and unpacking them in another. Depending on square footage, you may struggle to find a place for your antique armoire or expensive entertainment center. Until you have a safe place in your home for these items, you may want to leave them at a storage facility or rent a storage unit from your moving company.
Although you can’t deduct costs and fees for items in storage previous to your move, you may be able to deduct temporary storage fees as you make the transition from your old address to your new one. The IRS allows you to write off these expenses so long as they occur up to 30 days after your move but before delivery to your home.
Let Uncle Sam Pay for Your Move
When you file your taxes this year, don’t forget to list your moving expenses as deductions. With enough tax write-offs, you could reduce your total tax liability or bring in a higher tax return.
However, keep in mind that your move must closely relate to the start of a new job or your new home must be at least 50 miles from your old one. Again, if you’re not sure whether your move qualifies for tax deductions, talk to a qualified accountant.