Deducting Moving Expenses
If you’ve moved–or are planning to move–this year to start a new job you may be able to deduct certain moving-related expenses on your tax return. You may also be able to deduct these expenses even if you kept the same job but moved to a different location.
- Expenses must be close to the time you start work.Generally, you can consider moving expenses that you incurred within one year of the date you first report to work at a new job location.
- Distance Test.Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous main job location was from your former home. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home. If you had no job at your previous home, your new job must be at least 50 miles from your old home.
- Time Test.Upon arriving in the general area of your new job location, you must work full-time for at least 39 weeks during the first year at your new job location. Self-employed individuals must meet this test, and they must also work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location. If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses, if you expect to meet the time test. There are some special exceptions to these general rules in cases of death, disability and involuntary separation. Please call us if you’d like more information.
- Travel.You can deduct lodging expenses (but not meals) for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay, but you can only deduct one trip per person.
- Household goods.You can deduct the cost of packing, crating and transporting your household goods and personal property, including the cost of shipping household pets. You may be able to include the cost of storing and insuring these items for up to 30 days while in transit or indefinitely if you are moving outside the United States.
- Utilities.You can deduct the costs of connecting or disconnecting utilities.
- Nondeductible expenses.You cannot deduct the following moving-related expenses: any part of the purchase price of your new home, car tags, a driver’s license renewal, costs of buying or selling a home, expenses of entering into or breaking a lease, delivery costs of furniture you buy on your way to your new home, security deposits and storage charges, except those incurred in transit and for foreign moves.
- Reasonableness standard.You can deduct only those expenses that are reasonable for the circumstances of your move.
- Reimbursed expenses.If your employer reimburses you for deductible costs of a move under an accountable plan, you must reduce your deduction by this amount. If you are reimbursed for nondeductible costs or under a nonaccountable plan, your employer must include the reimbursement in your taxable wages on Form W-2.
- Update your address.When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS.
Don’t hesitate to call us, if you have any questions about deducting moving expenses or need help figuring out the amount of your deduction for moving expenses.