Moving to a new home for a job can be expensive. Some expenses to consider include cost of hiring a truck or the services of a moving company, gasoline, and labor. However, the moving cost can be claimed as a tax deduction if you meet the requirements set forth by the IRS.
Following are the requirements:
Distance
You are qualified for tax deductions if your new job takes you at least 50 miles further away from your previous home than your old job.
Exceptions:
Members of the military are exempted from the 50-mile requirement if the change of station is permanent. This includes moves within a year of retirement or termination from active military duty. Specific instructions applicable to military members can be found in Form 3903.
Work Duration
You must work fulltime for at least 39 weeks for the next 12 months after the move, although not necessarily in the same taxable year. For self-employed individuals, the requirement is 78 weeks after the move, including 39 weeks for the first 12-month period. In some situations, the work time rule is waived; this also applies for seasonal workers under special situations.
Exceptions to the 39-week requirement:
Transfer to another location for the employer’s benefit
Job termination due to disability
Discharge or layoff for reasons other than willful misconduct
Death of the taxpayer prior to completing the 39-week work requirement
Moving back to the US after living and working abroad. This situation is covered only by the distance requirement. In addition, a surviving spouse or dependent of an expat can claim the deduction upon moving back to the US within 6 months after the former expat’s death.
Move Related to the Start of Work
Moving expenses incurred within a year of starting work in a new location are allowed to be deducted; however, the other requirements must likewise be met.
Exceptions:
The rule doesn’t apply if there are extenuating circumstances that prevent moving within the required 12-month period from happening or otherwise make it difficult. An example is delaying the move for 1 ½ years to allow your kid to finish high school.
What can be deducted?
Storage and transportation of personal items and household goods, as well as moving truck rental, packing expenses, and hiring movers are allowable deductions. Expenses to move pets and vehicles are also allowed. Moving-related insurance expenses incurred within 30 days prior to or after the move can also be deducted.
Cost of meals isn’t allowed, but lodging on the way to the new home can be deducted. Likewise, toll and parking fees, and cost of public transportation are allowed. If you drive the moving vehicle yourself, you may deduct either the actual cost of gas and oil, or the prevailing rates per mile applicable for the tax year as set by the IRS. There are a few moving tools and calculators that will help you to decide what you can include in your tax write off.
Receiving Employer Assistance
Any amount provided by the employer in the form of moving assistance must be deducted from the total being claimed for tax deduction. This is applicable only in cases where the employer did not include the moving assistance in the total taxable wages. Otherwise, it will be tantamount to double-dipping which the IRS highly disapproves of.
Conclusion
The allowable tax deductions for moving-related expenses is intended to encourage members of the American workforce to seek out new and better job opportunities by keeping them mobile. There is no question that a job-related move comes with inconveniences, but being able to use the related expenses to claim for tax deductions can definitely help soften the impact. So, when moving, make sure to carefully review and account for all your move-related expenses to maximize the tax benefits you can enjoy.
