How to Take a Moving Tax Deduction
Did you know that your moving expenses are tax deductible! Sadly, many people don’t know this and overlook this easy way to recoup some of their out-of-pocket expenses on moving. This is true even if you choose to take the standard deduction instead of itemizing. In other words, they lower your adjusted gross income (the amount your taxes are based upon) and save you money!
So just what can you deduct, and what are the rules that apply? We’re going to give you a quick rundown to make sure you deduct all that is allowed!
If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. You can deduct your moving expenses if you meet all three of the following requirements:
- Your move closely relates to the start of work
- You meet the distance test
- You meet the time test
Here are some of the most important points to consider when deducting moving expenses:
Important criteria you must meet to qualify
Distance: This is one of the major tests you have to meet. Your new job must be 50 miles or more further from your old home than your old job was from that same home. So if you worked around the corner from your old job previously, your new job has to be at least fifty miles away from that; on the other hand, if you worked twenty miles from your old home, the new job must be at least seventy miles away. If you were unemployed, then the new job must be fifty miles away from your old house as well.
Time: The other important criteria is that you must work full-time for 39 weeks or more during the first twelve months after your move. Self-employed people must work at least 78 weeks during the 24 months following the move, including at least 39 weeks during the first 12 months. Of course, if you moved later in the year, you will not have met the entire time test; you are still allowed to take the deduction if you expect to meet it. However, you will have to amend your return or claim the deduction as “other income” on the following year’s taxes if you do not meet the time test.
Eligible expenses to deduct
Costs for packing and transporting: This includes amounts you pay to people that pack your goods, or help you load them on the truck, professional movers, shipping fees or fees paid for renting a moving truck or transportation for your pets and your vehicles.
Personal transportation: If you drive your vehicle to your new home,
but your spouse and the children fly to the location, both sets of travel expenses are deductible. One day’s lodging is also deductible in case it is a long trip. (Meals are NOT deductible, however.)
Utility costs: Fees that you pay to connect or disconnect your utilities at either home are deductible.
Car expenses: You can deduct either the actual expenses you incurred for the use of your car during the move or take a deduction for the standard mileage rate of 24 cents per mile. In addition, parking fees and tolls can be deducted.
Storage: If there is a gap between the time your belongings leave your old home, but before they are delivered to your new place, that storage cost is deductible, as is the cost of insuring them during this time.
Filing for the moving expense deduction is relatively easy; you will complete the IRS Form Number 3903 and attach it to your income tax return. Get the nitty-gritty details about moving expense deductions on IRS Publication 521 or Topic 455 on the Internal Revenue website, and be sure to deduct all that is allowed.