Moving On Up: Tips to Maximize Your Tax Credits
Moving Day
No one really likes moving: it’s costly, stressful, and generally a pain in the butt–and usually the lower back at the same time. But there’s a small light at the end of that tunnel: there are some tax benefits available to movers. Two things worth noting: the following presupposes that you’re moving for a new job; costs incurred for moving within the same town do not qualify for a deduction.
There are a few requirements which must be met:
Distance Requirements
The distance between your new job and your former home must be at least 50 miles farther than your previous employer is from that home. The IRS requires you to use the shortest commutable routes between two locations to judge this distance.
Time Requirements
You must work full-time for a minimum of 39 weeks during your initial 12 months, which starts on the day you arrive at your new location. If the 39 weeks are not consecutive you can still satisfy this requirement, whether it’s for one or multiple employers.
Okay, I Qualify: So What Is Deductible?
You may deduct any reasonable expense that you incur during the transport of your personal and household items to the new home.
This includes the cost of renting a storage unit (up to 30 days) if you are unable to immediately move your stuff into the new space. If you drive your personal vehicle, you are also able to include gas, oil, parking fees, and any road tolls. If you’re moving a long distance, you can deduct airfare, train tickets, or bus fare.
Claiming the Moving Expenses Deduction
Because of the required 12-month period, most taxpayers are unable to satisfy the time requirements until the following tax year. However, the IRS permits you to claim the deduction in the year you move. Should you not satisfy all requirements at the end of the 12-month period, you must reverse the deduction.
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Tax Credits That Get You a Larger Refund
When it comes to tax season taxpayers want to get the most they can out of their yearly return. Using tax credits to boost your refund is a great way to get back some of your hard-earned income. It’s important to know about the different types of tax credits available. In this article we will discuss some of the tax credits which can boost your refund.
What Are Tax Credits?
Tax credits have the ability to reduce the amount of federal and state income tax you owe to the government. They are an exact deduction of the income tax that you owe. Some credits are refundable while others are not. Having a refundable credit means that you still receive the credit even if it exceeds your charged amount.
Educational Tax Credits
There are two types of educational tax credits available to taxpayers: The American Opportunity credit, and the Lifetime Learning credit. The American Opportunity credit has the ability to cover up to $2,500 in undergraduate educational costs while the Lifetime Learning credit covers up to $2,000.
Child and Dependent Care Credit
If your child is under the age of 13 or has a disability and is placed with a babysitter or daycare center while you’re at work, you may be eligible to obtain the Child and Dependent Care Credit. This credit allows you to claim back money used to look after the child if the time used is dedicated to your career.
Conclusion
Determining what tax credits most benefit you is vital to maximizing your tax return. Make sure to do careful research to figure out which returns work in your favor.
Image credit: Jonathan Rolande
