What You Need to Know about Moving and Available Tax Deductions

Are you relocating to a new home? Did you know that some of the expenses of moving your belongings, insuring your goods, and traveling to your new location can sometimes be tax deductible?  Well, in order to get the deduction, you have to pass two tests. Pass them and you can deduct the cost of moving. Of course, you should seek specific advice from your tax professional before putting these steps into action.

Test 1

Q: Did you move because of a job?

A: If no, none of your costs are deductible. If yes and the distance between your new job and your former home is at least 50 miles greater than your old commute to work, your moving costs are deductible.

Note: It does not matter if this is your first job, a new job, or the same job in a different location.

Test 2

Q: During the first year after the move to your new location, did you work full time for at least 39 weeks?

A: If yes, your costs are deductible. This second test insures that you moved for work and not just for a change of scenery.

Note: The 39 weeks do not need to be consecutive or with the same employer.

If your tax returns are due before the 39 week mark, you can still write off your costs, but don’t forget you still MUST still meet this requirement. Additionally, if you are laid off or transferred before the 39 week mark, the IRS will waive the 39-week test.

Once you pass these tests, the deductibility of your moving expenses depends on whether your employer reimbursed you the cost of your move. If so, you don’t have any expenses to deduct on your tax return (since your employer paid for them…which is good news). If your employer did not reimburse your moving costs, then your out-of-pocket moving costs including temporary storage for up to 30 days, packing and moving of your personal belongings, insuring important goods, utility connection costs, traveling to your new home, shipping pets, and lodging expenses when you first arrive at your new location are deductible.

Things to Remember and Take Note of:

  • You must move within 12 months of starting your new job or you will not be eligible for deductions.
  • Only one spouse needs to meet the employment rules.

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