Moving and taxes: What to know for 2020
February 07, 2020 / Tips and tricks, Long-distance moves
With the April 15 deadline getting clearer on the horizon, we thought we'd take a moment to focus on what movers need to know when it comes to filing their 2019 taxes. We'll also explore what people who are planning a move in 2020 can expect for next year's filing.
Let's get some bad news out of the way. In previous years, people who changed residences within the U.S. were sometimes able to deduct their moving expenses when they filed their taxes. Under most circumstances, that's no longer the case. Some military moves may still qualify for deductions, however.
Here's what long-distance movers need to know about their taxes.
Has moving changed your income tax?
If you moved from one state to another, the answer is probably yes.
While your federal income tax filing will remain unchanged, you'll need to file partial returns for each state where you lived in the previous year.
This might not be a big deal if you've moved, say, from Washington state to Texas, two states that don't tax income. For other people, it'll be a big change. To add to the complexity, some states use a progressive income tax like the federal system, whereby those in higher-earning brackets are expected to pay more, while other states have a flat rate.
To get the full rundown about income tax in your area, look up your state on this IRS web page.
To give you a general sense of how income tax rates vary from the state to state, TurboTax interpreted data from the Federation of Tax Administrators to determine their ranking of the states with the highest income tax rates in the country.
The five states with the highest income tax rates:
States with no income tax:
- South Dakota
How have your property taxes changed?
While buying or selling property will have its own impact on you your tax burden and deductions, property taxes also vary significantly between jurisdictions.
To begin with, many states don't have a vehicle property tax, but others do, so that could increase or decrease your liability immediately.
Second, local real estate taxes, which are not handled at the state or federal level, can be very different from one location to the next. Since average house prices may be substantially higher or lower, too, just looking at the average percentage for the state isn't enough to accurately determine how much you'll have to shell out. Consider the price of the house, too.
All in all, examine this issue carefully, because effective property taxes can range from Hawaii's 0.3% to New Jersey's 2.13%. That's according to data provided by the Tax Foundation and interpreted by 24/7 Wall St.
How to file when you move
As we mentioned, if you've moved across state lines, you'll need to file partial returns for both states as well as a federal return. Your specific situation may add some complexity to the situation. For instance, what if you own a business in one state but live in another? Always consult dedicated tax professionals to help with your specific situation.
For all of your moving needs, however, Atlas Van Lines is standing by. Reach out to a local Atlas agent today to start planning your upcoming move.
Back to Blog