Did you recently move for a new job? If so, you may be able to claim your moving expenses as a tax deduction. After all, the cost to move can be quite high, especially when you factor in labor, the cost of a truck, gas, or hiring a moving company outright. Taking this tax deduction allows you to offset the high cost to move by reducing your tax bill.
In order to qualify for the deduction, make sure you meet the following requirements and fill out Form 3903.
Requirements for Moving Expense Deductions
Your new job must be at least 50 miles farther from your old home than your old job was. For example, say you used to live in Long Island and had a 10-mile commute to your job in Manhattan. Then you took a job in Upstate New York and moved there. Your workplace in Upstate must be at least 60 miles from your old home in Long Island to qualify to deduct your moving expenses.
If you’re a member of the military, you can still claim a deduction for moving expenses even if you do not meet the 50-mile requirement – but only if you’ve been given a permanent change of station. A permanent change of station includes “a move in connection with and within 1 year of retirement or other termination of active duty,” according to the IRS. Check Form 3903 for specific instructions on deductions for military members.
2. Work Time
You must work full-time for at least 39 weeks during the 12 months following your move in order to take the deduction. However, these weeks don’t all have to be in the same tax year. If you’re self employed, though, it’s a little different. You must work full-time for at least 78 weeks during the 24 months following the move, with at least 39 of those weeks during the first 12 months. There are some situations in which the work time requirement is waived, as well as special situations for seasonal workers.
According to the IRS, these are the exceptions to the 39-week rule:
- If your job ends because of disability
- If you are transferred to another location for your employer’s benefit
- If you are laid off or discharged for a reason other than willful misconduct
- If the person whose taxes the form is being completed for has passed away (before completing 39 weeks of work)
If you previously lived and worked outside the United States and are moving back, you are subject only to the distance requirement and not the work time requirement. Pursuant to that rule, you can deduct moving expenses if you are the spouse or dependent of a deceased person who formerly worked outside the U.S. and you have decided to move back to America within six months of the death.
3. Your Move Is Related to the Start of Your Work
Generally, if you incur moving expenses within one year of when you start work in the new location, you can deduct them, provided you meet the other tests as well.
There are also exceptions to this rule if extenuating circumstances make moving within a year of working at the new location difficult or otherwise prevented it. The IRS provides this example: If you delay a move for 18 months so that your child can finish high school, you would still be able to deduct moving expenses.
What Can You Deduct?
- Transportation and Storage of Household Goods and Personal Items. Moving costs, such as renting a moving truck, hiring movers, and paying for packing are deductible, as are the costs to move vehicles and pets. You can also deduct storage and insurance expenses as long as they are incurred within 30 days (on either side) of your move date.
- Travel and Lodging. You can’t deduct the cost of meals, since presumably you were planning to eat anyway. But you can deduct lodging en route to your new home as well as tolls, parking, or the costs of public transportation. If you drive yourself, you may deduct either the actual cost of oil and gasoline or, for moves in 2014, 23.5 cents per mile.
What If I Received Assistance From My Employer?
The IRS disapproves of double-dipping, so you must subtract the amount of any cash assistance you were provided by your employer from the moving expenses you intend to deduct. However, this only counts if the employer did not include assistance as part of your taxable wages. Any assistance that counts against what you spent should show up on your W-2 in box 12 with the code letter P. So, if you spent $3,500 to move, and your employer provided $2,000 in assistance, you would still be able to deduct $1,500 of moving costs.
The moving expense deduction is intended to help keep the American worker mobile and able to scout out new opportunities. Even though moving for a new job is a hassle, you can certainly make it less of one by deducting the cost of your move. In addition to job moving expenses, be sure to take a look at job search expenses that are tax-deductible for more opportunities to save.
Did you relocate or change jobs in the past year? Which deductions are you eligible for?