Anyone who relocates for a job knows what a hassle it can be: finding a new house, packing everything up, shipping furniture, and transporting pets. It can also be expensive. But these costs, for people who meet certain criteria, are taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. -deductible. The details are spelled out in IRS Publication 521:
Household goods and personal effects.
You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. For purposes of moving expenses, the term “personal effects” includes, but is not limited to, movable personal property that the taxpayer owns and frequently uses.If you use your own car to move your things, see Travel by car, earlier.
You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects.
You can deduct the cost of shipping your car and your household pets to your new home.
The pet-moving deduction strikes us as comical. Of course, moving a pet is difficult and costly, but this is a perfect example of deductions that have gotten out of control. Once a deduction (or credit or exemption) is created, more and more details must be added to account for any and every conceivable situation that any taxpayer could face. If we create a deduction for moving expenses related to relocation, then we must decide which items to include in the deduction: furniture, artwork, drapery, vehicles, food in the refrigerator, pets? We must decide which shipping methods will be allowed, what packing materials will be covered, and whether there will be a time limitation before and after the move. (What if I want to buy a pet from a neighbor but that pet will not be ready for adoption until three weeks after my move: can I have the new pet shipped and deduct the cost as a relocation-related expense?)
Also, what qualifies as a pet? If I regularly feed a stray cat in my front yard, can I count it as a pet and pay to have it shipped to my new home so that it won’t go hungry after I move? And what’s to stop me from upgrading my pet’s travel accommodations, knowing that Uncle Sam (i.e. other taxpayers) is picking up part of the tab?
The point is that deductions necessarily become complicated. And those added complications cost money, in the form of taxes we pay to support the IRS and its employees, taxes that pay the salaries of elected officials who write tax laws, and accountants who help clients figure out whether Spot’s deluxe, heated, two-story, velvet-lined traveling case is fully deductible. The complexities associated with deductions also cost time and energy: the time it takes to figure out which deductions we can take, the time to fill out the paperwork and organize receipts, the time that government officials and accountants spend scrutinizing receipts and writing laws.
Isn’t there a better way everyone could be spending that time and money? A better approach would be to simplify the tax code, eliminate most deductions (we’re not just picking on pet owners), and reduce compliance costs in the process. Eliminating deductions, credits and exemptions would also allow us to lower tax rates for everyone.
Spot won’t mind traveling in the basic, no-frills carrying case anyway.
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