How Should You Deal With Taxes After A Move?
We all know that moving to another state is expensive. There are costs for transportation, storage, and the new home itself. However, what might not seem glaringly obvious are how taxes can be impacted. Sometimes dealing with taxes after a move can seem like a bit of a hassle, but if you take the necessary precautions, it will be much easier.
When thinking about relocating, consider moving to a state without income taxes. Alaska, Nevada, South Dakota, Texas, Washington, Wyoming, and Florida all do not have tax income. While Florida may not have personal income taxes, they do impose taxes on the value of certain business assets. Plus, New Hampshire and Tennessee only tax dividend and interest income. Moving to a state without income taxes can save you a large chunk of money in the long run so take them into consideration when searching for a new location. Unfortunately, if you decided to move twice during the same calendar year and end up having lived in three states, you may end up paying state income taxes in all three states.
Moving Expense Deductions
Federal tax laws allow people to deduct moving expenses if their relocation relates to starting a new job or transfer to a new location for your present employer. There is only one catch, the distance between your new job and your former home must be at least 50 miles farther than your previous employer is from that home. You also have to work full-time for a minimum of 39 weeks during the initial 12-month period that starts the day you arrive at your new locations.
You can deduct quite a bit of the moving expenses. The transportation of household items, renting a storage unit, and traveling to the new location can all be deducted. Plus, if you drive to the new location in your personal vehicle, you can include the cost of oil, parking fees, and highway tolls. For long distance moves, the cost of airline and train tickets can also be deducted. Make sure to keep detailed records and receipts.
Claiming the moving expense deduction is one of the few tax deductions you can claim before knowing whether you satisfy the time test until the following tax year. However, if you do not satisfy all the requirements at the end of the 12 month test period, you must reverse the deduction.
Luckily, many places are able to help with all of this important tax information even though it is still important to take into account before you go through with the move. Don’t be afraid to ask for help since taxes can get a little messy.