Moving Expenses

June,

I am so pleased to find your website and I have just purchased your book, and Four Steps for recordkeeping.

I have been an indie since 2003, after spending 20+ years in corporate America doing what I do now: providing employee benefits consulting advice to mid-sized and larger companies. I started my business in my home in Illinois and moved it to Smyrna, TN.

My question is, as a sole proprietor can I deduct my moving expenses? The move was more than 50 miles and I did not cease doing business during the move.

Thanks very much,
Pam


Hello Pam,

Only the business portion of your move may be deducted as a business expense. The balance, if it meets certain minimums may be deducted as a personal expense.

If you don't have separate invoices from the mover or a specific way to calculated the business portion you need to review everything you moved. If your business equipment and files filled about 10% of the truck, then take 10% of the cost. Some really organized indies, or those who have been really messed up by movers in a previous experience, keep an itemized list of everything that went into the truck. If you did that, then use your list to come up with a percent for business.

Best,
June

Expenses While Changing Work Locations

Hi June,

For the past several years, I have owned a portrait photography business in Florida as a sole proprietor. I've closed the business now in anticipation of a move to Tennessee, where I plan to re-open my business as a full-time venture. If I make business purchases like new equipment prior to the actual start-up in Tennessee, will they qualify as business deductions on my taxes? Someone once told me that if you purchased items prior to being "official" (licensed), then you couldn't write them off.

Thanks, Cheryl D


Hi Cheryl,

And I bet that someone was Aunt Tillie whose grocer's son once delivered food to an accountant. Right?

I assume you did not stop being a photographer during the move. You simply put things on hold while you packed up boxes and made the trip. You are not changing professions, simply changing locations. I'm sure that if you met someone on the trip who said he wanted to use your services, you'd take the information and contact him as soon as you were settled in your new place. You see you were open for business even though your studio was on the move.

Your business did not end its existence. And so because you were in business and willing to take clients all your expenses are the same as before and after the move.

Were you not already in business but had expenses preparing to go into business those costs would be start-up costs and would be treated differently on your tax return than regular business expenses.

And, as always, read the book that can simplify your tax and financial life, AND save you money!SELF-EMPLOYED TAX SOLUTIONS .

-- June