Small business owners and individuals alike must often keep some of their personal belongings in a storage unit for various reasons, especially if they are moving. But does the IRS allow these storage expenses to be written off on your tax return when filing it? Bert Seither, The Startup Expert™, explains.
Under the popular moving expenses deduction, you can deduct unreimbursed moving costs you incur when transferring household goods and personal belongings from your old residence to a new place. The main caveat with this is that your move has to be related to work, such as relocating in order to change jobs. The deductible costs you pay to complete this move include the rent money you spend to keep items in storage and insurance fees you pay to ensure these items are safe. However, there is a limit on how much you can write off. According to IRS rules, you can only deduct the expenses of renting a storage unit for a maximum of 30 days if you’re unable to move into your new residence immediately after moving out of your old one.
When it comes to small businesses, there is often a lengthy list of expenses that entrepreneurs are on the hook for. Storage costs can appear on this list, and these expenses may not always be temporary because of long-term storage needs for certain companies. In general, the IRS allows most storage costs to be deducted as a business expense. Perhaps you keep your inventory in a storage unit or warehouse that you don’t own and is separate from your primary business location. Maybe you run an online store selling small pieces of refurbished furniture that you buy at garage sales or consignment shops and fix up to resell. As long as these items are directly tied to your small business, Bert Seither, The Startup Expert™, says you can almost always write off the storage costs you incur to keep them in a separate unit or room for future access and use.
As long as you qualify, don’t hesitate to claim any storage expenses as a tax deduction when filing your income tax return with the IRS. The price of renting a storage unit can be expensive in certain areas, particularly if you rent it out for several months or even years. So, at the very least, take advantage of the tax savings on these costs when possible. Bert Seither, The Startup Expert™, also suggests checking out other relevant deductions you can use to reduce your tax liability and put more of your hard-earned money back in your pocket instead of going to Uncle Sam. These may include the vehicle deduction, the home office deduction, and writing off health insurance premiums.