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Relocation Expenses And Important US Tax Regulations

You certainly may not think about it, but on moving the tax calculation does become very much complicated. Moving may be applicable to around one or two additional events that are taxable. This certainly is one of the things that you may have to consider before 15th April arrives.

You certainly may be happy to find that the following states does not consider state income tax.
Texas Washington
Tennessee Florida
South Dakota New Hampshire
Wyoming Nevada
Arkansas 

So, in case you are moving to one such state then you certainly can be lucky. Florida certainly has imposed intangible tax, New Hampshire and Tennessee also has an interest along with Dividends tax.

So, whenever you shift, your employer may also pay for some of the expenses. These may certainly be placed under one categories: excludable, deductible or even taxable. So, in order to consider the best move you may have to qualify for the following conditions:

Distance Test: You have to consider the distance between your old residence and new one as it need to be at least 50 miles more from your work place or old residence.

Time Test: You are expected to work at the new location for nearly 39 weeks during the first year.

Related to starting work: You are expected to incur all the moving expenses within one year from the reporting time.

In case your employer reimburses for the cost of transporting, 30 days for the day of settlement in the new area and this certainly will not be considered as an income. You have to keep in mind that deductible items are certainly considered as costs and will not be considered as deductibles.

In case your company pays you lump sum for all the expenses at the time of moving, you may have to maintain all the costs that shall be considered at the time of moving. You can also claim them by form 3903 from IRS. And certainly can be deducted from form 1040.

All other reimbursements including house- hunting ,pre-moving, equity loses, meals are considered as wages.

Following are the items that can be considered as deductibles or expenses:
Van cost when moving.
Insurance
Unpacking and packing.
Reconnecting and disconnecting utilities.
Lodging
Transportation
Storage
Tip for van driver
Shipping car or cost of driving (10cents/mile, toll, gas).
Disassemble and reassemble price for items (ice machine, satellite, above ground pool etc)

You have to keep in mind that there is difference between national and international move. In case you move to London you may have to pay tax. This is also deductible from the tax you pay in US. Some countries also have treaties that certainly does encourage between doing business between two different countries. In case you qualify for tax exclusion for foreign earned income up to $ 78000 in 01 and $ 80000 in 02-07, then US may also waive away income tax.

They also guarantee a roundtrip pay. This certainly means expenses for insurance, utilities, fee for lease which is non refundable, furniture rent, and repair for tax.

In case you have to take complete advantage that are included in this article, you can also make use of professional tax preparer.
 

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