Tax Deductible Moving Expenses

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Tax Deductible Moving ExpensesThe first time you move into a new place, the entire process can be exciting and fun. For most people, that novelty wears off after a few more moves, with the entire ordeal becoming something you dread instead of looking forward to it.

If you are moving to a new city in search of a new job or to accept a new position, then you might be more willing to put up with the hassles associated with moving. It’s also worth noting that many moving expenses may be tax deductible when you relocate for work.

Today I’m going to look a bit more closely at what expenses qualify and how you can claim these income tax deductions when you file your income tax return.

What moves qualify?

Before you attempt to claim moving expenses, be sure that the move itself qualifies. Qualifying moves are the result of relocating for your current employer or accepting a position from a new employer. In addition to being work related, the move must also pass the time and distance tests.

  • Time test: In the first year (12 months) following your move you must work full-time for at least 39 weeks. For self-employed individuals, the first year requirements are the same (39 weeks), and you must work for a total of 78 weeks during the first 24 months.
  • Distance test: Your new job must be at least 50 miles farther from your old home than your current (or old) job. In other words, if your old commute was 20 miles, then your new job must be at least 70 miles from your old home in order for your moving expenses to qualify as a tax deduction.

What expenses qualify?

Any expenses resulting from moving your personal effects and household goods can be used as a tax deduction. The expenses must, however, be reasonable to the move. For example, if you are moving from point A to point B, but decide to stop off on the way or take a detour for other purposes, those expenses would not be eligible as a tax deduction.

It’s also important to note that only expenses that are directly related to the move will be eligible. Perhaps the most common non-deductible expenses that you will likely incur while traveling are meals. But when traveling by car, you can deduct gas and mileage as long as you keep good records to prove your expenses.

How to claim moving expenses as a deduction

In order to claim qualified moving expenses on your income tax return you will report information on IRS Form 3903. Total moving expenses incurred while traveling will also be reported on Line 26 of Form 1040.

As with any income tax deduction, it’s advisable to keep accurate records that provide proof of money spent on your eligible moving expenses. Since it’s common for things to get misplaced or even lost while traveling, consider using a large envelope that can be sealed to hold all of your receipts until tax time.

One last thing… If your receipts don’t have dates or a description of the purchase or charge, be sure to make a note on the receipt itself as soon as your receive it so you won’t have to guess what the expense relates to at a later date.

Good luck, and happy moving!

5 Responses to “Tax Deductible Moving Expenses”

  1. Anonymous

    do you think travel(with some of your belongings) and lodge expenses are deductible? If you are in the military and moving to a different locations.

  2. Anonymous

    Good post here! So would the cost of hotel stays en route to your new work destination not be tax deductible, since they are not directly related to moving your household items?

  3. Anonymous

    You know, it’s kinda crazy, but I’ve never claimed expenses for moving on our tax returns, and we’ve moved 3 times in the last 10 years. Moved from Florida to Texas, and then from Texas to California. And I’m a loan officer…….think I would know better – duh!

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