How to Deduct Your Moving Expenses

How to Deduct Your Moving Expenses

One of moving’s saving graces is the opportunity to save money by deducting your moving expenses on next year’s taxes. Unfortunately, like all things related to the IRS, the process is pretty complicated. Luckily for you, we’ve put together the following guidelines to simplify things.

First things first… Can You Deduct Your Moving Expenses?

To qualify for a tax-deductible move, you need to meet two requirements of the IRS:

1) The Distance Test

Your new home needs to be 50 miles further away from your place of work than your last home was. Or, if you did not have a job (or worked from home) before, your new workplace must be at least 55 miles away from your old home.

2) The Time Test

You need work full-time for at least 39 weeks in the 12 months after the move. If you move late in the year, and can’t fit in 39 weeks before the end of the tax year, the IRS will still let you deduct your moving expenses if you plan to work 39 weeks of a full-time job. If you end up not doing so, you can always amend your tax return later, or deduct your savings as “other income” on next year’s tax return. Also, these weeks do not need to be consecutive, nor with just one employer!

Exceptions to the time test do exist. If any of the following situations apply to you, you are still eligible for move-related tax-deductions:

  • You’re transferred by your employer.

  • You’re fired for anything besides willful misconduct.

  • You have to leave the job due to becoming disabled.

  • You’re filling out the form for someone who has passed away.

  • You’re in the military and moving due to a permanent change of station.

  • You lived and worked abroad and are moving back to the US to retire.

  • You’re the dependent/spouse of a deceased person who worked and lived outside the US, and you’re moving from the deceased person’s home to a home in the US, within 6 months of their death.

You’re also allowed to deduct if you’re moving to the US from a home abroad, and if you’re moving abroad.

To see if you’re eligible to deduct moving expenses, the IRS has a helpful quiz you can take here.

What’s Deductible?

If you meet the requirements above, you can deduct the following expenses:

Travel Costs

  • Gas/oil for your vehicle

  • Highway tolls

  • Parking fees

  • Rental cars

  • Flight/train tickets

  • Hotel/motel charges (does not include meals)

Moving Costs

  • Moving company costs

  • Cost of storage up to 30 days

  • Packing materials: boxes, tape, crating, etc.

  • Costs of shipping pets and cars

  • Costs to insure your goods during transit

  • Fees to connect/disconnect utilities — Does not cover late fees or reimbursable deposits

Note that the IRS clearly states that only “reasonable”costs can be deducted, which basically means only those costs that require you to move directly from your old home to your new one. So if you’re moving from NYC to Boston, you can’t deduct the fuel costs for the detour you take to see your grandparents in upstate New York.

While this article covers most of the information you need to know, head to this IRS page for more details and exceptions, because when the IRS is concerned, there are always more details and exceptions!

Finally, if you’ll be filing your taxes yourself next year, use this form to deduct your moving expenses.

Good luck!

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