18 Mar Deducting Your Moving Expenses
Are moving expenses deductible for the average family? It depends on the particular circumstances. While the tax code is generous when it comes to deducting moving expenses, there are three conditions that must be met to make your moving cost deductible on an itemized return.
1. The move has to be related to starting a new job
• includes moving as result of being relocated within the same company
• beginning work for a new employer
• starting of a new business in a new location.
2. The location of the new job has to be more than 50 miles further from your current residence than your old job
• It is important to note, is not the distance from your residence to the new job that is the criteria, but rather how much farther from your residence the new job is as compared to your old job. For example, if your old job was 15 miles from your residence, the new job has to be at least 65 miles from your residence to qualify for moving expense deduction
• There is also the condition that home you move into is physically closer to the new place of work than the old home, the exception being if you are required by your employer to live in a certain area, or if the commute is shorter, even though the house is farther.
3. You have to work full time at the new job for at least 39 weeks during the year following the move
• This condition must be met unless employment is terminated as result of disability, death or layoffs.
• If you are self employed, the criteria time criteria is working 78 months during the 24 months following the move
• Relocation moving expenses that satisfy all the above requirements can be deducted the same year even when you have not satisfied the time test (number 3 above), if you reasonably expect to satisfy that condition in the coming tax year.
What Moving Expenses qualify for the deduction?
All reasonable expenses incurred in the process of relocating are deductible. This includes:
• cost of moving household items and personal belongings, automobiles, and pets
• house hunting expenses, closing costs, costs associated with connecting/disconnecting utilities
• transportations costs including airfare, family lodging (while moving), temporary living expenses
• storage for up to 30 day
There is no cap on the dollar amount that can be deducted as a moving expense, but the amount is expected to be “reasonable”.
For more information on deduction moving expenses, please see IRS Publication 521
Disclaimer: This information is not intended as tax advice and does not include all aspects of Federal Tax Law as it relates to moving expenses and their deductibility. Please seek the advice of a tax professional for help on deducting a moving expense.