Tax Deductible Moving Expenses

Tax deductible moving expensesThere are tons of reasons to move to a new city. People move to be closer to family and loved ones, to get a fresh start, and to experience a different part of the country or world. But I think it’s safe to say that one of the most popular reasons to move is for a job, whether it’s a new job or a relocation through a current job. Old job or new, if you are moving for work, some of your moving expenses may be tax deductible.

It’s important to discuss the following points with your tax consultant to ensure that you are filing correctly, but I can provide you with a basic outline of requirements in plain English. Here are six points you should check to see if you are eligible to deduct moving expenses regarding travel and your belongings:

1.      Timing: You can usually deduct expenses incurred during your move IF the move takes place within one year of your start date at work in the new location.

2.      Distance: Take the “distance test.” If your new job is at least 50 miles further from your old home than your last job was, expenses can be deducted. A lot of people are confused by this one. An example usually helps. If your old home was 30 miles from your old job, your new job location would have to be at least 80 miles from your old home.

3.      Time Spent: You need to be employed full-time for a minimum of 39 weeks during your first year at the new location. If you find that you will be filing before you have satisfied the time test, you can still deduct allowable expenses if you expect to meet it in the following years.

4.      Travel: Lodging and transportation expenses can be deducted for both you and your family. This includes hotels, airfare, vehicle mileage, parking fees and tolls that you encountered en route to your new home. But, they can only be deducted once per person. So if, for example, you traveled back and forth between homes more than once, the travel expenses for only one of those trips are tax deductible.

5.      Household Goods: The cost of packing and transporting your goods via a moving company are deductible if the requirements above are met.. Depending on your situation, you may be able to deduct storage costs as well.

6.      Utilities: The fees associated with disconnecting your utilities at your old home and connecting them at your new home are also tax deductible.

Unfortunately, any costs associated with selling your old home or purchasing your new one, car registration, lease breakage, security deposits and permanent storage are not tax deductible. If you are relocating for your company, ask HR or someone in the relocation department if any of these non-deductible expenses are covered in your policy.

Since moving for work can be stressful, and costly, it’s nice to know that some of the expenses incurred are deductible when it comes time to file your taxes. If you find yourself in this situation, remember to hold on receipts and to thoroughly track your spend! But, always remember to consult with an expert to be absolutely sure you are eligible and filing correctly.