Chicago Relocation

So you’re moving to Chicago — What tax breaks can you take?

September 13, 2008

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John D’Ambrogio

Welcome to the Windy City!  City of neighborhoods, City of Broad Shoulders….City with the highest sales tax in the NATION.  Speaking of taxes (and legal tax avoidance)… Lots of people are excited about the new housing bill’s tax advantages for first time buyers (See Tax Code Change) for more information on that.  I personally think the jury is still out on how that will actually help our market.  Regardless, if you’re transferring to Chicago you may want to brush up on good old Internal Revenue Code Section 217.  This code allows deductions for a number of specific moving expenses if you’re doing the move on your own.  Two very specific requirements must be met, however: The Distance Test. The new Primary workplace has to be at least 50 miles farther from your former residence than the old primary work location was. It’s very specific – For example if your old workplace was 15 miles away from your former residence, your new workplace must be an additional 65 miles further away from your old work place (that’s 50 plus 15).  If you are relocating without leaving a job (i.e. you had no former employer), this new job has to be 50 miles away from your former home.

The Time Test. You must be a full time worker for at least 39 weeks during the first 12-month period after arriving in the locale of your new job. This test does NOT apply if you die (not a good way to avoid the test) are disabled (ditto), have an “involuntary separation, or are transferred for the direct benefit of your new employer.

If you meet both the distance and time tests, you are allowed deductions for reasonable moving costs

•    Storage and transport of household goods
•    Moving Expenses – i. e. transportation costs

You may want to speak to your accountant for details, but these are some deductions that are not to be missed! As someone more famous than me once said – Tax evasion may be illegal, but legal tax avoidance is a God given right!