Moving expenses, insurance premiums and identity theft are on some readers’ minds as the tax-filing deadline fast approaches.
DEAR MR. MYERS: I’m about to move to Florida to take a new job. Will my moving expenses be deductible?
ANSWER: I get this and similar questions often, especially when the April 15 income-tax deadline draws near. And the answer is always the same: It largely depends on how far you’re moving.
I’m devoting this entire column to answering some of those recent questions.
Generally, the Internal Revenue Service will let you deduct your moving expenses if your new job is at least 50 miles farther from your old home than your old job was. If you meet this so-called “distance test,” you can deduct the cost of hiring professional movers — both for packing and the actual transportation of your household goods — or the cost of renting a moving van if you’re doing the work yourself.
You can also deduct the cost of travel for yourself and the members of your household from your old home to your new home. That includes the cost of lodging, but not meals.
Additionally, the IRS provides move-related mileage deductions. The figure was 23 cents per mile in 2015, but the rate for moves that will be made this year hasn’t been determined yet.
There are some caveats. For starters, expenses that are reimbursed by your new employer are not deductible. Equally important, you must take the most direct route from your old home to your new one. That means that if you’re moving, say, from Chicago to Miami but plan to swing north first to spend a week in New York, you can’t expect Uncle Sam to help underwrite your sight-seeing jaunt.
Fortunately, you don’t need to itemize to take these deductions. All you need to do is to complete the five-line Form 3903, Moving Expenses, and attach it to your Form 1040.
Get a free copy of IRS Publication 521, also titled Moving Expenses, by downloading it from irs.gov or by phoning the agency at 800-829-3676. Also remember to save all your moving-related receipts, credit-card statements and a mileage log in the unlikely event that you are later audited.
REAL ESTATE TRIVIA: Once you have filed your 2015 tax return, you can quickly find out when you can expect your refund by visiting irs.gov/refund. The IRS claims that 90 percent of all refunds are issued within 21 days after a completed return is received.
DEAR MR. MYERS: We know that we can deduct the prepaid points, monthly mortgage-interest charges and the property-tax payments we made when we bought our first home last year. The bank also required us to get a fire-insurance policy as a condition of obtaining the loan. Is that tax-deductible too because it was mandated by the lender?
ANSWER: No, payments for fire-insurance protection for an owner-occupied home are never deductible. Landlords can write off the annual cost, though, as an ongoing business expense.
Get a copy of IRS Publication 530, Tax Information for Homeowners, for details about what can and cannot be deducted in the first and subsequent years of homeownership.
DEAR MR. MYERS: My plan to purchase a condominium fell apart last year when, during the mortgage-application process, I discovered that I had become the victim of identity theft. I’m still trying to sort this whole mess out, and now I’m worried the crook who stole my identity might try to file a false tax return in my name to get my refund. What can I do to protect myself?
ANSWER: You’re right to be concerned. The IRS says thieves using stolen Social Security numbers claimed $5.8 billion in fraudulent refunds in 2013, the most recent statistics available. It was able to block another $24.2 billion in phony refunds from being issued.
The first thing you need to do is to file your upcoming tax return as quickly as possible. It won’t stop a bad guy from filing a return in your name as well, but he can’t get his mitts on your refund if your return gets to the IRS first.
As an added measure of security, complete IRS Form 14039, Identity Theft Affidavit. As with all other IRS forms and publications, it can be downloaded from the agency’s irs.gov website or can be obtained through the mail by calling the agency at 800-829-3676.
The affidavit puts the IRS on notice that a bogus return with your name on it may be coming its way. The agency will likely then gives you a six-digit “Protection Identity Number”: If it receives a return without your PIN on it, the paperwork will be rejected.
David W. Myers’ column is distributed by Cowles Syndicate Inc.