Question

Cindy moved to Seattle from Portland to work as a software engineer in 2002.  Assume she meets the duration test.  She incurs moving expenses of:  $10,000 for the movers (she could have paid $5,000 for a cheaper moving company); hotel fees of $1,000 on route to Seattle, $100 in meals while on route to Seattle, and closing costs of $3,000 for her new home.  All of these fees qualify for the moving expense deduction.True/False and Explain.

Answer 1

The Answer to the Statement is “FALSE”  as all of these fees (mentioned in the question) are not qualify for the moving expense deduction.

EXPLANATION TO THE ANSWER - As per IRS, the following expenses are eligible for deduction:

a. Moving household items and personal effects

b Traveling (including lodging but not meals)

Also, the claimed expenses should be reasonable I.e. an individual can deduct only those expenses that are reasonable for the circumstances for movement.

The following expenses are Non- deductible expenses: (not an exhaustive list, only a few relevant expenses are mentioned below)

a. Expenses of buying or selling a home (including closing costs, mortgage fees, and points).

b. Any part of the purchase price of your new home.

c. Driver's license.

d. Mortgage penalties.

e. Real estate taxes, etc.

Basis the above , the following expenses are Non - deductible -

1. $100 in meals while on route to Seattle
2. Closing costs of $3,000 for her new home.