If you have lost your job, there are a number of tax issues that you may come across. How you deal with these issues can impact both your taxes and your finances. The following are typical issues you could experience, along with their tax treatment:
The first step is to clear out all your stuff from your attic or basement. If some of that stuff is in good condition, consider donating it and getting a tax deduction for it rather than hauling it with you. It is all about new beginnings. Speaking of new beginnings, perhaps you landed that dream job. If you are moving for a new job, you may be able to deduct your moving expenses.
Here is what you ought to know about moving deductions:
- The move needs to be job-related
This means you are moving for a new job, or you are moving because of business relocation
- The timing of the move needs to be correlated with the new job
The time of your move must be closely related to the time of starting your new job or new location of your business. “Closely related,” as defined by the IRS, generally means within a year of starting your new job or relocating due to business. If you are unemployed, it is not necessary that you arrange work before heading to a new locale.
- Unlike some other tax provisions, you actually need to work for this one
If you are a current employee, directly after your move, you must work at least full-time, 39 weeks in the first 12 months. If you are self-employed or unemployed, the above applies, plus, you must work at least 78 weeks in the first 24 months.
- You need to satisfy the 50 mile rule
Your new workplace must be at least 50 miles farther than what your past job was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.
So what are allowable deductions?
- Tax deductions for travel
Expenses that you can claim are gas, oil, tolls, and parking fees. For mileage, you can either keep tabs on expenses, or you can take the standard deduction of 23.5 cents per mile.
- Packing and moving belongings
These types of expenses are deductible. And also is the cost of shipping your pets or cars.
- Storage cost
Any storage costs associated with your move, starting on the day you leave your former home and for the next 30 days, are tax deductible.
Welcome to Massachusetts!
If you came to Massachusetts for a new job, the tax deduction carries over to your Mass tax return. That is the consolation prize for having to file two state part-year resident tax returns. If you are leaving Massachusetts, well, you are out of luck on Mass, unless you are moving to one of these other fine welcoming states that allow a moving expense deduction.
What has been the furthest distance you were required to move either as a result of a job change? Leave your comment below or visit our Facebook or Google+ pages.