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Can you write off moving expenses?
If you are moving to a new residence the Internal Revenue Service (IRS) may allow you to deduct your moving expenses. That can be great news, especially as this results in an “above the line” tax deduction that avoids having to deal with itemized deduction rules.
But it isn’t so easy to qualify for moving expense deductions.
First off, you have to be moving because of a new job. And that new job must require a commute from your old home that is 50 miles greater than the commute to the job you are leaving. If the difference isn’t a full 50 miles more—then you can’t deduct expenses. Second, you must actually be employed full time in the new location for at least 39 weeks during the 12-month period following the move. That 39 weeks can be made up of successive jobs, by the way, and there is some consideration extended to those who get laid off or transferred during the qualifying time. So that’s helpful.
Also helpful is that, if you own your own business or have been out of the workforce or a part-time worker—you may qualify. And if you’re a partner in a business you can also take the deduction if you meet the above tests—and work full time for 78 weeks or more in the 24 months after the move. For married couples filing jointly, only one spouse needs meet the above distance and time tests.
For the endless array of “what-ifs,” refer to the IRS publication at irs.gov/pub/irs-pdf/p521.pdf or phone your local IRS office.
So what’s it potentially worth to you at tax time?
Moving deductions can be significant, and as previously stated they are applied “above the line” and therefore spared any conflict with the continually changing rules on deductions. But the tax folks aren’t quite as generous as before in calculating what qualifies as a deduction.
These days you are pretty much limited to the following: packing and shipping costs for your possessions, with insurance and up to 30 days of storage covered; the expense of traveling to your new home (once), along with lodging but not food (you can likewise deduct your actual driving costs, like those for gas and oil, or an underwhelming 24 cents per mile for the drive in 2013); and finally, the expense incurred in disconnecting utilities at your old home and getting necessary hookups at the new residence.
What’s not allowed includes expenses in buying or selling a home or acquiring or breaking a lease, apartment security deposits, or any losses resulting from having to sell or give up club memberships plus driver’s license or car registration fees. Nor are the expenses incurred while out house hunting eligible.
Get and complete IRS Form 3903 (Moving Expenses) once you’ve totaled up your allowed deductions, and the resulting write-off is entered on page one of your 1040. Keep in mind that if you get reimbursed for some or all of your moving expenses by an employer, you’re not allowed to also deduct that portion on your taxes. Usually you fill out a form at work detailing your expenses, and your employer lets you know what can be deducted.
Meet all the above requirements and your tax savings could be substantial.