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Making Your Move Manageable

The act of moving ranks is about as high on the list of things you want to do as getting a tooth pulled without Novocain. Good planning, tax deductions and a lot of patience can make the experience tolerable.

About two months before you move, start getting estimates from moving companies. If possible, have the estimator survey your home and prepare a written estimate. Alternatively, you can get a bid over the phone or via email. Based on your discussion, the moving company will issue a written estimate. Never accept an oral estimate. Moving companies provide three types: binding, nonbinding and not-to-exceed. A binding estimate guarantees that the amount quoted will be the final price. Nonbinding estimates are approximations of the cost. A not-to-exceed estimate is a binding estimate that will be reduced if the actual cost of the move is less than the estimate.

Underestimating is not uncommon. To avoid being shocked by the final bill, provide an extremely detailed inventory when getting an estimate. Things such as the contents of your garage, packed boxes and plastic bins can add up to a surprising amount of weight or cubic feet. Or choose a binding or not-to-exceed estimate. These estimates may appear to be more expensive, but you eliminate the unknown and the difference likely won’t be as great once you consider the odds that a nonbinding estimate is inaccurate. You will be charged separately if the movers encounter problems with parking, road access, time restrictions, stairs or elevators, regardless of the type of estimate you received.

In addition to comparing estimates, check the reliability of moving companies with the local Better Business Bureau, do an online check and ensure that the company has a federal Department of Transportation license number.

Moving companies are only required to offer basic carrier liability for the property being moved. This limited insurance covers property at no more than 60 cents per pound.  To illustrate, if your 5-pound plasma television is damaged, you would receive $3 for it.  So to protect against disastrous events such as all of your property being destroyed or damage to a significant number of items, obtain an independent insurance policy prior to your move. The amount of coverage should cover the cost of replacing all of the property on the van. You can opt to have a higher deductible for a lower up-front premium.

So, you chose a moving company, packed your belongings and moved to your new home. Now what? Gather the receipts related to your move and give them to your tax preparer.

You may deduct your moving expenses if you moved as a result of a change in your job or business location or because you started a new job or business. You must meet two tests to qualify for this deduction — the distance test and the time test. To pass the distance test, your new job must be 50 miles farther from your old home than your old job was from there. In other words, if you commuted 15 miles before your job change, your new office location must be at least 65 miles from your old home. If this is your first job or you’re self-employed, your workplace also must be 50 miles from your old home. The time test requires that you work full time in the general location of your new office for at least 39 weeks during the year following your move. For self-employed individuals, the time test has two parts: 39 weeks in the first 12 months and 78 weeks during the first 24 months.

Not everyone is going to move in the first 13 weeks of the year, which would be necessary to meet the time test in the same tax year as your move. The Internal Revenue Service says that’s OK. If you expect to meet the time test, deduct the expenses in the year that you move. If you subsequently fail to meet the test, either amend your return or report your previously deducted expenses as income in the year you failed the time test. These alternatives may not have identical results, and you should seek professional advice before deciding how to proceed.

These expenses are deductible: the amount you paid to pack and move your household goods and personal effects; the amount you paid to store and insure household goods; and costs you paid to travel from your old home to your new home. Travel costs include transportation and lodging. If you travel using your own vehicle, you can deduct either the actual cost of gas and oil or mileage at the standard rate, currently 24 cents per mile. Generally, you can include all eligible moving expenses incurred within one year from the date you started at your new job location. If you can show that circumstances prevented your family from moving within one year of your start date, you can still deduct your moving expenses. An example is moving your family 18 months after your start date to allow your child to graduate from high school. If you are moving outside of the United States, a broader range of storage and moving deductions is available.

Qualified moving expenses are reported on Form 3903, which is filed with your Form 1040 for the year in which the move occurred.

Organization is the key to a smooth move. The time you invest in finding a reputable moving company and documenting your expenses will be well spent.

Client Service Manager Rebecca Pavese, based out of Atlanta, contributed several chapters to our firm’s most recent book, The High Achiever’s Guide To Wealth, including Chapter 3, “Being Smart About Budgets And Credit,” and Chapter 9, “Medical And Disability Insurance.” She was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.