2011 Filing Season Tax Tips for Transferees

Tax season is upon us, with most Americans starting to put together the paperwork they need to file their returns.   The Worldwide Employee Relocation Council (ERC) has offered some tips to keep in mind when filing your return.

Here are several items deductible as moving expenses that are sometimes overlooked:

  • Tips to the moving van driver or helpers.
  • Mileage for driving second or third cars to the new location (in addition to the first car). The deduction for 2011 is 19 cents per mile from January 1 to June 30, and 23.5 cents per mile thereafter.  (The deduction will decrease to 23 cents per mile for 2012).
  • Lodging expenses in the departure location for one night after the household goods are packed, and one night in the new location on the day of arrival.
  • Moving household goods from a location other than your main home, up to what it would have cost to move them from the main home
  • Storage of household goods for up to 30 days, including the cost of moving the goods into and out of storage.  Note that the costs for moving the goods into and out of storage remain deductible even if the goods are in storage more than 30 days.
  • Expenses not reimbursed by your employer, such as extra crating, shipment of unusual items, tips to van line staff, etc.

And remember: You don’t have to itemize to deduct moving expenses.

  • If the seller of your new house agreed to pay part of your mortgage points instead of reducing the sales price, IRS says you can deduct those points, even though the seller paid them.
  • If you ever refinanced your mortgage, don’t forget to deduct the entire remaining balance of points paid on the refinancing in the year you sell your home.
  • If your new job is for a different employer, and you earned more than $106,800 in 2011, you may have had too much deducted as contributions to Social Security. You can take a credit for the excess over $4,485.60 on line 69 of your Form 1040 tax return.  (Note that this amount is lower than in past years because the employee share of Social Security tax was reduced from 6.2% to 4.2% for all of 2011).
  • If you moved to one of the states with state and local sales taxes but no general income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming) you may benefit from an itemized deduction for state sales taxes. The deduction was reauthorized by Congress for 2010 and 2011 at the end of 2010.
  • If you paid a premium for mortgage insurance, you may be entitled to an itemized deduction as mortgage interest for the portion of the premium allocable to 2011. No deduction is available, however, if your adjusted gross income is more than $110,000.
  • If you claimed a homebuyer credit on your purchase of a home in 2008 through 2010, and you sold your home or stopped using it as your principal residence when your were transferred in 2011, you may have to repay on the 2011 return the entire credit taken.   See IRS Form 5405 and its Instructions for details.  Repayment is always required for credits taken in 2008.  However, for credits claimed in 2009 and 2010 note that if you sold the home and did not have a gain, none of the credit must be repaid.  In calculating gain, remember to subtract from the sale proceeds all purchase closing costs, and any improvements you made to the home during the time you owned it.

This year’s return will be due on Tuesday, April 17, 2011, because the normal due date of April 15 is a Sunday, and April 16 is a holiday (Emancipation Day) in the District of Columbia.

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