Did You Move Into an Office This Year? What That Means for Your Taxes

Move Into An Office

If the location of your business changes this year, chances are you may incur some major expenses. The good news is, whether you are a small business moving into new offices or an independent contractor moving into an office for the first time, there are some major tax deductions available to you.

Most moving expenses can break down into 2 categories

  •      The move of the business, including all office furniture, equipment and supplies
  •      The move of the employee or business owner that directly relates to the business move

Both of these moving costs come with deductions that can be applied at the time you pay taxes. These deductions include the cost of moving expenses related to moving equipment, furniture, supplies and inventory. You can also deduct any personal expenses that were incurred as part of a move as long as they were directly related to the move. It’s very important that you keep careful track of these expenses by holding onto receipts and documentation costs.

There are certain costs that cannot deduct from your taxes even though they might relate to your move into an office. For example, personal meals are not deductible as a moving expense. Additionally, IRS regulations do not allow a person to take a moving expense deduction and business expense deduction for the same expenses.

Are you a sole proprietorship or partnership? There are certain criteria you must meet in order to qualify for tax deductions. First, you must move at least 50 miles away from your previous location and must work at least 39 weeks in the new location during the 12-month period following the move.

Corporations and LLC’s are able to deduct the full expense of the move from company taxes. This includes all packing expenses, loading expenses and transport costs. Even the cost of the surveys you use to ensure the new space is big enough for your business.

Related: 3 Things You Can Do Mid-Year to Prepare for Tax Season

Understanding and keeping track of deductible moving costs can be a challenge. That is why so many small businesses and independent contractors use an accounting firm such as Hacker Accounting. We can help you use moving expenses to your advantage in the right way. If you have specific questions, please give us a call at 602-375-5251.

Chris Hacker
Chris has been working in the bookkeeping and accounting field for over 15 years preparing business, income and payroll taxes. Chris has a bachelor’s degree from Arizona State and is an Enrolled Agent with the Internal Revenue Service.