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There are a few major decisions in life that can take a lot of pondering, for example,
getting married, making a career change and moving. When it's time to evaluate whether or not to go ahead with such an
important event, many people use the method of weighing pros and cons.
The following list of questions has been developed to help you decide whether or not your pending move is a good idea. Answer
these questions honestly, and you might be surprised with the results!
1. Are you moving to be close to someone?
2. Will this move allow you to grow as a person?
3. Are you excited about moving to the city in question?
4. Will you be leaving behind special people that are a part
of your life?
5. Will the schools be good for your children?
6. Is the crime rate tolerable?
7. Will housing be affordable?
8. Do you have the opportunity for better employment?
9. Is the
weather to your liking?
10. Will you be able to continue extra curricular activities that you enjoy?
11. Do you know people in the new town?
12. Will your spouse and/or children be happy
and adapt?
If you answered mostly Yes, your move is
bound to be a success! More than 3 No's and you may want to do some more research and/or contemplation on your move.
Additional Costs To Consider
Some areas of the country
are so different in terms of climate and city or urban life that we've developed this list of "additional costs"
you might incur when moving to a new environment. For example, someone moving from Phoenix to New York will probably have
to expand their winter closet to include a wool jacket, long underwear and boots, or they may have to spend extra money for
parking their vehicle. However, they will no longer have to worry about buying the chemicals needed for upkeep of their swimming
pool or changing car batteries every two years.
With this in mind, please consider the following expenses which may impact the cost of your move:
1. State and local income tax
2. School tax
3.
Property tax
4. Home Insurance (need for flood, hurricane, etc.
5. Car insurance rates
6. Car registration fees
7. Heating and/or cooling costs - depending on average
temperatures
8. Pool care costs
9. Yard care costs
10. Home maintenance - in hot, dry climates a roof will need more frequent replacement whereas cold, wet climates have to
do weather stripping
11. Wear and tear on your vehicle due to moisture or salt on roads, excessive temperatures
12. Clothing - the types you will need depending on average temperatures, standard business attire or local style
13. Public transportation availability
14. Climate gear - like snow tires, snow blower, etc.
15.
Travel - back to previous residence city to visit family or take care of other matters
16. Phone
bills - could be higher due to keeping in touch with family, friends or handling business matters
17.
Daycare costs - these could be higher or lower than what you're used to
18. Private school - you
may choose a change in school-type depending on the quality of schools in your old/new residence.
In addition, check out The Salary Calculator®, which is a wonderful
resource in estimating the cost of living when moving from one city to another.
Tax Implication of Moving
You
may not realize it, but when you move, tax returns for the year of the move are generally more complicated than other years.
Moving can trigger one or more "taxable events". And this is something you should consider long before April 15th
arrives!
You'll be happy to learn that the following
states have NO state income tax:
- Texas
- Florida
- New Hampshire
- Wyoming
- Arkansas
- Washington
- Tennessee
- South Dakota
- Nevada
So, if you're
moving to one of these states, consider yourself part of the lucky 20% in America! However, Florida has an Intangibles Tax,
and New Hampshire and Tennessee have an Interest & Dividends Tax.
When you relocate, your employer may pay some of your relocation expenses. These expenses fall into one of three categories:
deductible, excludable, or taxable. To first be considered a qualified move, the following tests must be met:
1. The Distance Test. The distance from your old home to your new main place of
business must be at least 50 miles farther than the distance from your old home to your old main place of business.
2. The Time Test. You must work, or expect to work, in your new location for at least 39 weeks during the first 12 months
after you arrive in the general area of your new job location.
3. Related to the Start of Work. You must incur moving expenses within the first 12-months following the time you report
to work in the new job location.
If your employer
reimburses you for the cost of transporting household goods and personal effects, 30 days of in-transit storage and traveling
from the old location to the new, these are considered Excludable expenses and will not be considered as income. Deductible
items are simply costs that you were not reimbursed for that qualify as allowable deductions. If your company gives you a
lump sum to pay for moving expenses, keep track of the actual costs that qualify as allowable moving expenses because you'll
be able to report them on IRS form 3903 and deduct on your federal form 1040.
All other reimbursements such as temporary living, pre-move, house-hunting, meals, equity losses, etc. are taxable and will
be reported as wages.
TIP: Keep Your Receipts!
The following is a list of expenses that can be deducted or excluded for your
move:
• Moving van costs
• Insurance
• Packing and
unpacking
• Disconnecting and reconnecting utilities
• Lodging
• Transportation
•
Storage
• Tipping the van line driver
• Cost of driving or shipping
your car (10 cents per mile, gas, tolls)
• Disassemble and reassemble costs for certain items (like a satellite,
ice machine, aboveground pool, etc.)
Tax implications are also
different between national and international moves. If you move to London, for example, you'll have to pay tax there.
The good part is that it's deductible from your U.S. tax. Many countries, however, have tax treaties to encourage business
between different countries. The U.S. will even waive income tax (up to $78,000 in 2001 and $80,000 from 2002 -2007) if you
qualify for the Foreign Earned Income Tax Exclusion. For this, two tests must be met - the Bona Fide Residence test and the
Physical Presence test.
Also, overseas assignments
guarantee a roundtrip move to be paid for. This means that reasonable expenses--including housing costs, utilities, insurance,
non-refundable fees for a lease, rental of furniture, parking and repairs--are tax deductible.
To take full advantage of the deductions outlined in this article or to receive
additional information, we recommend that you use a professional tax preparer experienced in this field.
| Move.com is a wonderful place to start if you are considering relocation. The city profile report will help you to find a place to
live where you will fit in and feel at home. This city profile report provides a detailed look at the people, places, and
conditions in an area: useful information on demographics, finances and economics, real estate, and other factors which may
impact the quality of life. The city profile report data is drawn from an array of sources, and is updated at least once a
year: |
- U.S.
Census Bureau estimates and projections, including latest monthly estimates for population at the city level.
- Bureau of Labor for employment data by industry and occupation.
- Internal Revenue Service statistics on tax filers and year-to-year migration.
- Federal Bureau of Investigation and local police departments
and municipalities for crime information.
- National Oceanic
and Atmospheric Administration for weather information.
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