YoonCheol Choi, TACS
The long winter has passed. With cherry blossoms down the streets, it is time to alleviate emotional burdens and enjoy the warming of Urbana-Champaign. While some of us go on vacations to celebrate another successful semester, some undergo the turning point of their lives after graduation.
Sammy was a friend of mine, who successfully received an offer from a prestigious accounting firm in California. The news invited him to the most ideal weather and cities from the infamous winter of Illinois. I found him one day anxiously talking about his issue. “Everything is perfect, but the moving expenses are higher than I expected…such a financial burden from the start”.
The IRS annually announces its updated tax laws to all taxpayers for them to prepare their financial situations in advance based on their circumstances. Like Sam, if one were to move to another location for the purpose of work, one would be eligible to apply for the moving expense tax deduction. Unfortunately, the label, “new job,” does not qualify everyone for this deduction. The new job location must be at least 50 miles of distance from the old job from his or her house. In addition, one has to work at least 39 weeks at the new job location, or 78 weeks if he or she is a self-employed entrepreneur.
Setting my friend as an example, as Sam moves to California for the purpose of work, the time of the moving has to be within 1 year from the start date of work. On top of these conditions, as mentioned above, the two locations must be 50 miles away from the old job site than from one’s home. Not only those, but Sam also will have to move into a reasonable distance from his new company. For example, if Sam were a great enthusiast of rock climbing and moves to Colorado to rock climb every weekend. His new home still qualifies for distance test. However, this wouldn’t be a qualifier for the ‘distance test’, as it is not reasonable to reside in Colorado while his company is in California. Lastly, if Sam is planning to work only 30 weeks in California, he cannot apply for moving expense deduction. On the other hand, if he were to work at another company in the nearby area to fulfill the time test, then he is a candidate to apply for the moving expense deduction.
Knowing tax laws are essential to prevent unnecessary expenditures if you are a taxpayer. Currently, over a million taxpayers miss a combined amount of over $1.1 billion tax refunds because they are not familiar with the taxpayer benefits. As little research about tax can save a great portion of your tax payments, utilizing and applying proper tax laws when needed is crucial to succeeding when the new tax season comes around.