What Part of Moving Expenses Are Deductible to a Company?
Patty Block
The Internal Revenue Service has many regulations about what moving expenses can be deducted. However, these regulations are for employees who move for job-related reasons. Companies have a much easier time justifying moving and relocating expenses. Learn what is deducible for your company, so that you can take the maximum number of deductions available to you.
Employee Moving Expenses
Employees can only deduct certain moving expenses from their taxes; however, a company can pay any employee moving expenses it wants to. The company can in turn deduct those payments from company income. A company can pay for moving vans, meals, hotel expenses, packing and unpacking and even cover travel to the new residence, if it wants to. The employee may not be able to deduct all of these expenses, but once the company pays the employee for any moving expenses, they can be deducted from the company's taxes. An employee cannot deduct any moving expenses from his personal income tax that were paid by the company.
Corporation and LLC Moving Expenses
If you relocate your company and it is a corporation or limited liability company, you can deduct the full expense of the move from company taxes. This includes all transport, packing, loading, and even surveys of the new space to make sure equipment and offices will fit. You can also deduct any brokerage commissions you pay to find new space.
Sole Proprietorships and Partnerships
If your business is organized as a sole proprietorship or partnership, you can move the business and deduct the expenses if you meet two criteria. You have to move at least 50 miles and you have to work at least 39 weeks in the new location during the 12-month period after you make the move. These criteria are similar to those for employees, except you can write off all moving expenses, whereas employees have limits on the type of expenses they can write off, such as meals during travel.
Moving Equipment to a Branch or Subsidiary
If you open a branch or second office, any expenses you incur in moving furniture, equipment or supplies to the second location are deductible. If you open a subsidiary that will be reporting its own taxes, you can split the costs between the parent company and the subsidiary, though you don't have to. If any members of your workforce have to relocate to work at the subsidiary, you can pay their moving expenses and deduct them.
Source: Small Business
Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.
Patty Block.
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