What Moving Expenses Are Tax Deductible?

Today many of us face the challenge and opportunity to start a new life at a new place. Yet moving isn’t the most pleasant experience one can go through. Moreover, moving could be expensive depending on the type of your move. Thus, it is nice to know which moving expenses is tax-deductible and what you should do to get those deductions.

Three major conditions you have to meet:

  1. Work related relocation
  2. The distance test
  3. The time test

Work Related Relocation

The first condition is important and it is necessary for you to be able to deduct moving expenses. Generally, you can deduct those expenses within one year of your move. However, it is not required that you have to be moving because of a new job. You can first move and then find the new job within a period of one year. If the moving is work related then in order for you to deduct moving expenses the cost can’t be covered by the employer.

Do You Pass The Distance Test?

Basically you have to move at least 50 miles. Your new job has to be at least 50 miles further away from your current job so you can deduct the moving cost. The 50 miles count from your old job, which means that if you have worked 20 miles away from home, to qualify for tax deduction, your new job has to be at least 70 miles away from you’re the home you are leaving. If you don’t meet this requirement, to get the deduction you have to prove that relocating will save you time and money in time.

What Is The Time Test?

The time test when looking to deduct moving expenses is that you have to work full-time for an employer for 39 weeks in the following 12 months. If you are or become self-employed, to meet this requirement and qualify for tax deductions you have to work full-time for 78 weeks in the following 24 months. If you move in the middle of the year and did not meet the time test before reaching the tax deadline, you can file for moving expenses tax deduction the following year.

Deductible Moving Expenses

The IRS call them reasonable deductible expenses like travel including lodging and all that encompasses moving of your household goods like packing and storage.

Travel By Car and Lodging Moving Expenses

If you travel by car with your family you can deduct you can deduct the amount you pay for gas, tolls and parking fees. You can deduct travel expenses for each member of the family, but that’s limited to one trip per person. You can not deduct any kind of maintenance or repair your car may need during the relocation.

Deduction for lodging expenses apply for any accommodations you may need after you can no longer live in your old home. Once your packing and wrapping has been done and you can no longer reside at your old home, you can deduct those lodging expenses you accrue for hotel for example.

Packing, Moving and Storage Moving Expenses

You can deduct the cost of any packing, crating, transportation and storage of your household goods. Even better, you can deduct the cost of shipping your pets and cars. Be sure to keep all receipts and the final bill from your moving company. You can read about average moving cost here or just get a free and quick estimate online. Chicago movers, New York movers, and other crews of E-Z Movers will provide you any information you need for smooth and cost effective move.

You Can’t Deduct The Following Expenses

  • Food expenses during and after the move
  • Pre-move trips or any other during and after the move trips
  • Costs related to buying the new home or selling the old
  • New furniture storage and transportation

To deduct your moving expenses you have to keep receipts of all IRS approved tax-deductible moving expenses. Your lodging and transportation – gas, hotel charges, fees related to canceling utilities, moving company cost, storage and any additional insurance you may have needed. Keep all the receipt and agreements stating the costs to give to your tax adviser. Moving expenses you can figure out on Form 3903 and deduct as an adjustment income on Form 1040.

For more information or any changes check with IRS and your tax consultant.

Let us know if you found this article helpful.


Posted on September 13, 2011, in Interesting to know, Moving Tips and tagged , , . Bookmark the permalink. Leave a comment.

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