Moving Taxes Deduction

Relocating locally or cross-country can be exhausting and costly. Yet many can deduct their moving expenses from their taxes if they meet some conditions.

Main Conditions To Get Moving Tax Deduction

• The moving is work-related.
• The distance test is met.
• The time test is met.

Is your relocation work related?

If you answer yes to that question, you can be sure you will deduct the moving expenses from your next year’s taxes. Moving for work or closely related matter is one of the most important conditions in order for you to qualify for a moving expenses deduction.

All moving expenses that you had occurred within one year of your relocation, you can generally deduct. Moreover, you can first move and then find a new job and still be able to deduct the relocation expenses.

It has to be within that one year though. If your employer is going to pay your moving expenses, you can’t qualify for a tax deduction. Only if you are paying for your moving, out of your pocket, you may attach a Form 3903 to your taxes.

Do you meet the distance test?

The distance test could be a bit confusing because it actually has nothing to do with the location of the new home. The moving tax deduction depends on the distance between your new home and your new workplace.

Your new place of work must be at least 50 miles farther from your old home than your old place of work was from your old home. So, if you used to work 20 miles away from your old home, now you have to work 70 miles away from your old place in order to qualify for moving tax deductions.

What is the time test?

To meet the time test you have to work 39 weeks, full time for the first 12 months when you move to a new home and job.

If you move and become self-employed, you must work 78 weeks for the next 24 months.

However, don’t worry – you do not have to work all those weeks in a row to qualify. If you have moved in the middle of the year and do not meet the time test by the end of the year, you can file for a moving expenses tax deduction the following year.

Are Moving Expenses Tax Deductible?

As long as you meet the tests mentioned above, here are the moving expenses you can deduct. The IRS calls the reasonable moving expenses that include your travel and lodging and that relate to the moving of your household goods.

The costs of:

• Packing and moving your household goods – you may use a professional moving company or your own labor and vehicle. However, the moving services of a moving company and all that they include are deductible.
• Storing and insuring your goods for a period of 30 days from your moving-out day.
• Shipping your vehicles and pets.
• Travel and lodging of you and your family while traveling from your old place of residence to your new home. Lodging expenses include only the cost of lodging for one day after you have moved out and can’t live in your home anymore. The expenses you incurred the day you arrived in the area of your new home.

You should report all moving expenses incurred and consult an accountant or tax professional to make sure you will get the most out of the deduction. For more information about Form 3903, you can read the IRS website.

You Can’t Deduct The Following Moving Expenses

• Any food expenses during or after the move.
• Travel expenses during and after the relocation (many companies will cover that expenses).
• Any costs related to buying the new home or selling the old (many companies will reimburse you for that).
• Any expenses for new furniture delivery or storage.

Make sure you keep the receipts for all moving expenses, especially for all IRS approved. Keep your bill of lading and any receipts you have acquired from the moving company if you have hired one.

Оr, if you have moved yourself from renting a truck, boxes, buying packing materials, etc., keep receipts from your and your family’s travel and lodging expenses like gas, airfares, hotel and meals.

Moving expenses you can deduct as an adjustment income on form 1040 and for this you will need form 3903. You should check with your tax consultant and with IRS for more information.

There are changes happening each year so, you need to stay up to date and pay attention to any tax deduction requirements changes.  You can do this on the IRS website, or again by checking with your accountant.

Let us know if you have moved for work and if you have used the moving taxes deduction.

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