What Office Moving Expenses Can Be Deducted?

There are times when a business decides that moving offices is beneficial for the growth of the business and/or for budgetary reasons. Changing locations can be an exciting time for a growing company, but it can also get expensive. Thankfully, the IRS has several allowable deductions you can take advantage of when you move. Tax Return

What Can Be Deducted for your Business? The IRS allows you to deduct the cost of moving supplies, equipment, and inventory related to the business regardless of the distance of the move. So whether you are moving across town or across the country, the cost to transport business-related items is fully deductible. This would include all expenses incurred for packaging and shipping these items and setting them up in your new location. You may also deduct expenses related to the lease or purchase of a new business location. As always, be sure to keep detailed records of all expenses you plan to deduct.

What Can Business Owners and Relocating Employees Personally Deduct? When it comes to deducting personal expenses related to a business move, the rules are much more restrictive. First of all, the personal expenses you deduct must be “directly related” to the move you are making for your business. Secondly, the move must pass the IRS “distance test”, meaning the new business location must be at least 50 miles further from your former home than the old location. Thirdly, you must pass the “time test”; this means you must have been employed full time by the business for at least 78 weeks during the past two years. In addition, you must be employed full time for at least 39 weeks in the first year at your new location. If your move meets all these criteria, then you are allowed to deduct your related expenses.

Be Careful Not to Double Dip: One word of caution; many expenses related to a move may also be regular business deductions that would normally go on your Schedule C. These include travel, hotels, meals, and entertainment. If you choose to take these deductions under moving expenses (only allowable if they are directly related to the move), you cannot deduct these same expenses on your Schedule C.

Moving to a new business location is most certainly an expensive endeavor, but at least you can get some tax relief during the process. Speak to a small business accountant about your particular moving situation and which expenses qualify to be deducted.

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