Moving can feel like stepping into a brand new chapter of your life – fresh surroundings, new business opportunities, maybe even a shorter commute (or a longer one if you’re unlucky). But amid all the excitement, there’s a detail that’s easy to overlook: taxes. Preparing for tax season after a move might not sound like a thrilling topic, but trust me, it’s better to tackle it now than to deal with an unexpected letter from the IRS later. And besides, with the right approach, it doesn’t have to be a headache.
Address Changes: Not Just for the Post Office
Moving means updating your address – a task most people associate with the post office and their favorite online shopping sites. But the IRS needs to know, too. If you’ve moved in the last year, you’ll want to ensure the IRS has your current address. Why? Because any tax-related correspondence (like refund checks or, less exciting, audit notices) will be sent to the last address they have on file. You don’t want that kind of mail being lost in the shuffle.
Updating your address with the IRS is pretty straightforward. You can either fill out IRS Form 8822 (snappy name, right?) or update it when filing your return. But don’t stop there! You’ll also need to update your address with your state tax agency. Different states have different sets of rules, so be sure to check what’s required for your specific location.
State-Specific Rules
This leads us to an important consideration: the state you’re moving to may have different tax laws than the one you’re moving from. Congratulations if you’ve relocated from a state with income tax to one without it! But if you’ve moved in the opposite direction, you’ll want to know the rules. When preparing for tax season after a move, make sure you know the state tax obligations in both your old and new states, especially if you’re moving out of state. For example, some states might tax income earned within their borders, even after you’ve left. Meanwhile, your new state might tax your worldwide income. Understanding these nuances can save you from an unwelcome surprise come tax time.
Deductions: Moving Expenses and More
Once upon a time, moving expenses could be deducted pretty easily. You packed up your life, and Uncle Sam would help with the bill. But as with many tax benefits, times have changed. These days, the moving expense deduction is only available for certain active-duty military members. Sorry, civilians, no deduction for the U-Haul anymore.
But wait – before you lose all hope, there are still a few tax-saving opportunities if you’ve moved for work. If your move was job-related, you might qualify for a deduction on some costs associated with selling your old home or buying a new one. For instance, mortgage interest and property taxes are still deductible on your primary residence.
Home Sale Exclusions
If your move involved selling a home, there’s more good news. The IRS allows for an exclusion of capital gains on the sale of your primary residence, up to $250,000 for single filers and $500,000 for married couples filing jointly. To qualify, you must have lived in the home for at least two of the last five years before the sale.
And while we’re on the topic of real estate, don’t forget about the potential state and local tax deductions, also known as SALT deductions. These allow you to deduct up to $10,000 in state and local property, sales, or income taxes on your federal return.
Handling Employment-Related Tax Changes
New job? New state? It means new taxes. One of the most significant changes you might encounter after a move involves your employment taxes. If you’ve moved to a state with different income tax rates or no state income tax at all, that’s something you’ll need to adjust for on your W-4 form.
Remote Work Considerations
And in the age of remote work, don’t forget that the location of your employer might impact your taxes, too. If you work remotely for a company based in another state, you could find yourself dealing with taxes in multiple jurisdictions. The good news? There are often tax credits available that can help offset any double taxation. But these rules vary from state to state, so do your homework.
Employers are also required to withhold Social Security and Medicare taxes, but if you’re self-employed or have side income, you’ll need to handle this yourself through quarterly estimated payments. This is a vital point to remember, as missing these payments could result in penalties, and no one likes getting those.
Settling In with the Right Help
For some people, navigating these changes might seem simple. For others, it can feel like unraveling a tangled web of deductions, credits, and forms. If you’re not confident handling these tax matters alone, consider working with a tax professional. Moving can bring unique tax situations that not everyone is prepared to handle on their own. If that sounds familiar, seeking professional advice might be a good move.
Of course, when you’re moving out of state, you’re juggling more than just your taxes. There’s packing, finding the right movers, setting up utilities – the list goes on. But just as you might trust Affordable Reliable Moving Company to get your belongings safely from point A to point B, making sure your taxes arrive at their correct destination takes the same level of care, attention, and a willingness to double-check the details before it’s too late. A small oversight now – like a missed form or an outdated address – can lead to bigger headaches later, so it pays to get everything in order from the start.
Don’t Forget Deadlines
One final note: pay attention to deadlines. State tax filing deadlines sometimes differ from the federal deadline, especially if you’ve moved to or from a state with unique tax requirements. Stay organized, keep good records of your moving expenses, address changes, and stay on top of deadlines to ensure a smooth tax season.
Conclusion: Moving Forward with Confidence
Preparing for tax season after a move doesn’t have to be overwhelming. Whether you’re sorting through address changes, adjusting to new state tax laws, or figuring out which deductions you can still take, the key is to stay organized and informed. Moving can already be a lot of work, so tackling the tax part early will save you time – and stress – down the road.
By updating your address, understanding state-specific tax rules, and seeking help if needed, you’ll be well-prepared for the tax season ahead. So, take a deep breath, get organized, and you’ll confidently move into this next phase – taxes and all.
This article was written by a Ghost Writer. On occasion, we ask others to write articles for the Cedar Valley Sentinel. In some cases, they do not wish to be identified. If you would like to write for the Cedar Valley Sentinel, as either a ghost writer or as a regular writer, please use the contact-us form and let us know.