Also, if your moving expenses
are already covered by your employer, you cannot double-dip.
A moving expense
reimbursement can be a tax-free form of compensation for employees.
Deductible moving expenses
fall into two categories, both of which are direct moving costs:
In order to qualify as a moving expense
, the expenses must bear a reasonable proximity in time to beginning work at the new principal place.
As of January 1, 2005, the standard mileage rates for the use of a car (including a van, pickup or panel truck) for business purposes was set at 40.5 cents a mile; for medical or moving expenses
, 15 cents a mile; and when providing services to a charity, 14 cents a mile.
It is my understanding that the Department of National Revenue, based on the current provisions of paragraph 62(3)(f), has taken the position that the reimbursement of GST payable on the cost of relocating an employee's new home would be a taxable benefit to the employee and not a deductible moving expense
. In line with this position, and with the underlying rationale that I have explained, I would find it difficult to support a suggestion that the effective date of the proposed amendment to clarify this matter be changed.
Fees associated with moving personal effects into a state, such as automobile impact fees, may be deductible based on a revenue ruling which allowed as a moving expense
deduction the excise tax imposed by Puerto Rico on the introduction of a second automobile into the island by a taxpayer moving there from the U.S.
Under pre-OBRA rules, businesses were required to include all moving expense
reimbursements in the employees' gross income and to give each employee a copy of Form 4782, detailing the amount of reimbursements of moving expenses
, to assist the employee in claiming moving expense
deductions in respect of amounts that had been included in the employee's income.
* Expenditures included in an employee's moving expenses
that are paid or reimbursed by the employer and includable in the employee's gross income under IRC section 82.
* Nonqualified moving expense
reimbursements, whether paid to the employee or a third party, will continue to be included in wages (form W-2, box 1) and subject to income, Social Security and Medicare taxes.
Thus, the employee would have income under section 82 for the amount of the $8,000 transaction costs, followed by a limited moving expense
deduction under section 217.
The distance test is the same 50-mile test used in the moving expense
rules--the individual's new place of employment must be at least 50 miles farther from the sold residence than the former place of employment.