Moving Expenses Can Be Deductible

Did you move due to a change in your job or business location? If so, you may be able to deduct your moving expenses, except for meals. Here are the top tax tips for moving expenses.
In order to deduct moving expenses, your move must meet three requirements:

1. The move must closely relate to the start of work.  Generally, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.
2. Your move must meet the distance test.  Your new main job location must be at least 50 miles farther from your old home than your previous job location. For example, if your old job was three miles from your old home, your new job must be at least 53 miles from your old home.
3. You must meet the time test.  After the move, you must work full-time at your new job for at least 39 weeks in the first year. If you’re self-employed, you must meet this test and work full-time for a total of at least 78 weeks during the first two years at your new job site. If your income tax return is due before you’ve met this test, you can still deduct moving expenses if you expect to meet it.

If you can claim this deduction, here are a few more tips from the IRS: 

• Travel.  You can deduct transportation and lodging expenses for yourself and household members while moving from your old home to your new home. You cannot deduct your travel meal costs.
• Household goods and utilities.  You can deduct the cost of packing, crating and shipping your things. You may be able to include the cost of storing and insuring these items while in transit. You can deduct the cost of connecting or disconnecting utilities.
• Nondeductible expenses.  You cannot deduct as moving expenses any part of the purchase price of your new home, the cost of selling a home or the cost of entering into or breaking a lease. 
• Reimbursed expenses.  If your employer later pays you for the cost of a move that you deducted on your tax return, you may need to include the payment as income. You report any taxable amount on your tax return in the year you get the payment.
• Address Change.  When you move, be sure to update your address with the IRS and the U.S. Post Office. To notify the IRS file Form 8822, Change of Address.

Premium Tax Credit – Changes in Circumstances. 
If you or anyone in your family purchased health coverage through the Marketplace and had advance payments of the premium tax credit paid in advance to your insurance company to lower your monthly premiums, it is important to report life changes to the Marketplace when they happen. Moving to a new address is one change you should report. Other things to report include changes in your income, employment, family size, and gaining or losing eligibility for other coverage. Reporting life changes as they happen allows the Marketplace to adjust your advance credit payments. This will help you avoid a smaller refund or unexpectedly owing taxes when you file your tax return.

Source: Internal Revenue Service

contact@officetaxservices.com

(858)247-1680

 

What to Expect at Tax Time if You Rent Out Your Vacation Home

Renting out a vacation property to others can be profitable. If you do this, you  must normally report the rental income on your tax return. You may not have to report the rent, however, if the rental period is short and you also use the property as your home. Here are some tips that you should know:

• Vacation Home.  A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
• Schedule E.  You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax.
• Used as a Home.  If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received. 
• Divide Expenses.  If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between rental use and personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use.
• Personal Use.  Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also considered personal use.
• Schedule A.  Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
• Rented Less than 15 Days.  If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income. In this case you deduct your qualified expenses on Schedule A.

 Source: Internal Revenue Service

contact@officetaxservices.com

(858)247-1680

 

 

Using QuickBooks - Tracking Mileage

Keeping track of mileage helps you get all the reimbursements you're due and it is important because all business-related mileage is tax-deductible. QuickBooks can help you keep records of the miles you drive.

If you want to track mileage on the vehicles you use for your business, create entries for your vehicles in the Vehicle List (List - Customer & Vendor Profile Lists - Vehicle List) first, set up the mileage rate (Company - Enter Vehicle Mileage - Mileage Rates), record mileage driven (Company - Enter Vehicle Mileage) and then, record the vehicle, date, miles driven, odometer settings, and reason for the trip.

Usually with the actual expenses method, you get a higher business vehicle expense deduction. However, note that the IRS limits the amount that you can include as vehicle depreciation, so you may not get the highest deduction with this method.

No matter which method you use, you need to record of your actual business miles, which the Enter Vehicle Mileage command enables you to do. By law, you need a good record of business mileage to legitimately claim the deduction.

When you prepare your taxes you can use one of the reports generated by QuickBooks. (Reports - Jobs, Time & Mileage)

• Mileage by Vehicle Summary;
• Mileage by Vehicle Detail;
• Mileage by Job Summary;
• Mileage by Job Detail.

contact@officetaxservices.com

(858)247-1680