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What expenses are deductible in a relocation

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If you live in a city dominated by a college or near a college campus, you may notice substantial changes during this time of year. Yes, colleges and universities across Missouri welcome students back in August; which commonly means that tens of thousands of students pick up their lives (and their furniture) and move for another year of study.

Just like college students, some businesses may have to relocate to take advantage of economic opportunities, or in some instances, to maintain profitability due to rising costs in their previous location. Either way, businesses, like college students may take advantage of deductions that could apply when it relocates.

This post will highlight the elements that the IRS considers in deducting moving expenses.

The distance test – The new location for the business must be at least 50 miles away from its previous location. This rule applies even if the new location is across state lines. An experienced tax law attorney can answer questions about whether a particular route is measured.

The time test applies – The business must be in operation for at least 39 weeks of the first 12 months after the business relocates in order for moving expenses to be deductible.

Not all expenses are deductible – It would be prudent to check with an experienced tax law attorney to determine if all of your expenses related to the company’s move are deductible.

If you have additional questions about the tax implications of a proposed move for your business, we invite you to contact us.

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