Moving is not fun in general, and worse than that, it is not cheap. If you are moving soon, then you must be thinking about the costs to move. Fortunately, moving costs are tax deductible if they meet certain criteria. When you are relocating because of work, you can deduct many of your expenses. Now you are probably wondering what the criteria are. Well, here it is – you must pass the time and the distance tests. These tests are relatively straight-forward.
Can you pass Both IRS Tests – distance and time?
The Distance test:
This 50 miles distance test is probably the biggest hurdle. The location of your new job must be at least 50 miles further from your previous home than your old job was from your old home. This means that if you lived 10 miles from your old job, your new job must be at least 60 miles from your old home.
Note: If you’re in the armed forces and you moved due to a PCS (permanent change of station), you are not required to pass the distance test.
The Time test:
This test has to components to it. It allows you to deduct expenses only during the first year following the relocation. If you are an employee, you have to work for at least 39 weeks during these first 12 months after your relocation. It is not a requirement that you have to be working for the same employer, or even consecutively all the weeks. As self-employed individual, you still have to have worked for 39 weeks within the first 12 months.
Now it’s time to gather your moving receipts.
Now, which Moving Expenses are Tax Deductible?
Many people would never think that nearly everything moving related is tax deductible. I am not even joking. When you are relocating due to work, you can deduct many of your expenses accrued because of the moving.
To claim your deductions you have to keep a detailed record of your moving expenses – all receipts and invoices, every expenses must be accounted for in paper (or electronically, you can always print it).
You have to keep your receipts for moving boxes, bubble wrap, plastic wrap and any other moving related material. You have to ask for itemized invoice from your relocation company. If you are shipping a vehicle you need a bill from the shipping clearly stating the cost to ship the car.
A checklist to help you get all deductible moving expenses in order:
Deductible travel-related expenses
- Car transport costs – when an auto mover is used.
- Lodging costs during relocation travel.
- The costs of a rental truck, plus gas and tolls paid on route.
- Hotel expenses near your old home within one day of your move. This is if for instance you finished packing late and wanted to begin your travels after a night’s rest.
- If you’re flying to your new home the cost of plane tickets is deductible, including baggage expenses.
- Costs to transport pets to your new home.
Deductible household goods
- Any relocation insurance or cargo insurance you had to pay.
- The costs of packing materials including moving boxes, wrap, packing tape etc.
- The bill for any professional moving company you may hire.
- The costs to move any items from a third location to your new house or apartment. For example, a boat or a camper that needs to be moved from a storage location to your new home.
- Any costs of storing and insuring household goods for a 30 day period after the moving out day.
- The costs of disconnecting or connecting utilities as a result of your relocation.
Now if you pass both tests, you can deduct most of your moving related expenses. The only costs you can’t deduct are meals or any moving expenses your employer had reimbursed. Moving expenses are figured on IRS Form 3903 you can find on the IRS website. If you have more questions you can check the IRS Publication 521: Moving Expenses. If you have any concerns the best way is to discuss your situation with a tax accountant. Best of luck at your new location!