In order to qualify for the moving expenses tax deduction you must meet certain requirements. Your move has to be strictly for the purpose of starting a new job or transferring to another location with your old job. Qualifying expenses are:
- Costs for packing and shipping your household goods and personal property: You can deduct the cost of packing and transporting your household goods and personal property from your old home to your new home, costs of connecting and disconnecting utilities, and shipping your car and your pets to your new home.
- Travel and lodging costs: If you and your family travel to your new home by car you can deduct your actual expenses for gas and oil or the standard mileage rate, parking fees and tolls, and lodging.
- Storage expenses: You can deduct the cost of storing and insuring your household goods and personal belongings for up to a month after your possessions have been moved from your old house and before they are delivered to your new house.
Time Test
If you are an employee of a company, you must work full-time for at least 39 weeks during the first 12 months after your arrival at the new location. This is the so called 39-week test. Count only your full-time work as an employee, not any other work you do as self-employed. You can have different employers for those 39 weeks but they have to be within the same general commuting area. You don't have to work 39 weeks in a row.
If you are self-employed, you must work full-time for at least 78 weeks during the first 24 months after your arrival at the new job location. This is the 78-week test. You can include any full-time work you do either as an employee or as a self-employed person. You don't have to be in the same business for all of the 78 weeks but you must work within the same general commuting area.
Distance Test
Your new job has to be located at least 50 miles further from your old home than the distance between your old home and your old job. It sounds a bit confusing but here's how to calculate whether you meet the distance test (use the shortest route in your calculations):
- Calculate the number of miles from your old house to your new job.
- Calculate the number of miles from your old house to your old job.
- Subtract number 2 from number 1.
Let's say you commuted 30 miles from your old home to your old job. Your new job is 80 miles away from your old house. The distance to your new job is at least 50 miles further - 80 miles minus 30 miles equals 50.
The move must have occurred within one year from the day you stated working at the new location and the distance from your new home to your new job must be less than the distance from your old home to your old job. If you meet all the requirements you'll be able to deduct any reasonable moving expenses that exceed reimbursements from your employer.
What you cannot deduct (from Publication 521):
- Any part of the purchase price of your new home.
- Car tags.
- Driver's license.
- Expenses of buying or selling a home (including closing costs, mortgage fees, and points).
- Expenses of entering into or breaking a lease.
- Home improvements to help sell your home.
- Loss on the sale of your home.
- Losses from disposing of memberships in clubs.
- Mortgage penalties.
- Pre-move househunting expenses.
- Real estate taxes.
- Refitting of carpet and draperies.
- Return trips to your former residence.
- Security deposits (including any given up due to the move).
- Storage charges except for those incurred in transit and for foreign moves.
Moving expenses must be reported on IRS Form 3903 (PDF), with the total expenses also reported on Form 1040, line 26. Reminder - save all your receipts.
