Getting a Tax Deduction on Your Moving Expenses
Anyone who’s moved a few times can tell you: not only is it a ton of work, it’s expensive. Whether you're moving across town or across the country, by the time you’ve moved everything into your new home, you could be out thousands of dollars. So it’s nice to know that if your move is job related, you may be able to deduct some of the expenses whether you itemize your deductions or elect the basic standard deduction.
If you're moving to start a new job, transferring to another location with your current employer or coming back to the U.S. after working abroad, you might be able to claim a deduction on your federal income return. To claim a moving-expense deduction you generally need to meet the following criteria: You may be able to claim a deduction for “reasonable” expenses associated with:
Moving household goods and personal effects from the former residence to the new residence and
Travelling (including lodging) from the former residence to the new residence.
Move related to start of work
Your move must be closely related, both in time and in place, to the start of work at your new job location.
Closely related in time. In most cases, you can consider moving expenses incurred within one year from the date you first reported to work at the new location as “closely related in time” to the start of work.
The 50 mile rule. Your new job must be at least 50 miles further from your home than your last job was. So, if you used to work five miles from home, your new job must be at least 55 miles from your old home. If you had no former principal place of work, you must be at least 50 miles from your former residence.
Time. You’ll need to work full-time for at least 39 weeks of the first year, though they needn't be consecutive or even at the same employer. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location.
Getting it back
If you meet these criteria, you may be able to claim deductions on the costs of packing and transporting household goods, including moving personal belongings from someplace other than your old home. You may also be able to claim deductions on the fees you paid to disconnect and reconnect your utilities at either end of the move. And you may be able to claim deductions on moving items from your household to your new home, on storage for up to 30 days, and on travel costs, except meals, for you (including one day's lodging along the way).
Sound good? It is. But there are some things you can’t claim a deduction for – including closing costs, legal fees, security deposits, new furnishings or renovations, and storage outside of the actual move. It also goes without saying that you will not be able to claim a moving expense deduction if you’re getting reimbursed for these expenses by your employer.
Lighten the load
Even the best of moves can be difficult. But take some time to discuss with your tax advisor to see if you qualify for a deduction on your moving expenses – it could lighten your tax load.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal or financial advisor for specific advice about your individual situation.