Moving can be expensive. Recent surveys have shown that long-distance moves can cost anywhere between $9,000 and $12,000! Thankfully, Uncle Sam has got your back when it comes to reducing the cost of your move.
Basic Eligibility Requirements
While you can deduct the majority of the expenses related to your move, you’ll need to meet certain eligibility requirements. These are detailed in IRS Publication 521 (Moving Expenses).
- Your move must be necessitated by a change in your job or business location
- Your new location must be at least 50 miles further from your previous home than your previous employer’s location
- You must work for as a full-time employee for at least 39 weeks during the first year following your move
- If you are a business owner, you must work full time for at least 39 weeks during the first year following the move, and for 78 weeks during the first two years.
- Military personnel is not required to meet either the time or distance tests to qualify for tax deductions associated with moving.
Most of that can be rather confusing, as is most of the communication that originates from the IRS.
Example of a Move That Qualifies for Tax Deductions
If your current employer is 35 miles from your home, you’ll need to move at least 85 miles away to be eligible for tax deductions. That’s because you have to move at least 50 miles farther than the distance from your old home to your old job.
Example of a Move That Doesn’t Qualify for Tax Deductions
If you’re currently driving 35 miles to work, and your employer moves his office location to 85 miles in the opposite direction, you won’t be eligible for tax deductions if you move. That’s because the total increase in distance traveled is only 50 miles – and you’ll need to move at least 50 miles plus the original distance to your office to qualify for the move.
What Can You Deduct?
You can deduct virtually everything associated with your move with few limitations. Deductible items include:
- Utility connection and disconnection fees
- Actual moving costs (renting a truck or hiring a moving company)
- Some storage fees
- Some insurance costs
- Some lodging expenses
- Limited travel expenses
- Shipping costs for your vehicle
Further Considerations for a Tax-Deductible Move
If you’re married and filing jointly, only one spouse must meet the time and distance requirements to deduct your moving expenses. If your employer is kind enough to provide even a partial reimbursement for the moving expenses, you can’t double-dip – you’ll only be able to claim expenses that came out of your own pocket.
Finally, if you deduct your moving expenses but then fail to meet the time requirements, you’ll need to amend your future tax returns.
The best way to ensure that your moving expenses are properly deducted is by working with an accountant, who will be able to maximize your deductions and save you a ton of money.