Relocating - Moving Expense Deductibility

While most everyone has heard that they can deduct moving expenses, not every move is deductible. For moving expenses to be deductible, the move must be a job related move and it must pass three tests.

1. Your move must closely relate to the start of work. In most cases, you can consider moving expenses within one year of the date you start work at a new job location. Expenses may be postponed for a reason such as allowing your child to finish school.

2. Your move must meet the distance test. Your new main job location must be at least 50 miles farther from your old home than your prior job location.

3. You must meet the time test. You must work full-time at your new job for at least 39 weeks the first year after the move. If you’re self-employed, you must also meet this test. Leave or vacation time counts as employment time, and so do involuntary absences because of illness, strikes, shutouts, and natural disasters. If you move later in the year and the 39 week period does not end before the tax return is due, you can still claim the deduction if you expect to meet the test.

Now that you have determined that the move does quality, what expenses can you deduct?

You can deduct the following expenses of moving yourself and the members of your household to your new location:

· The cost of moving household goods and personal effects. This includes the cost of packing, crating, transporting, storing and insuring (for any consecutive 30-day period after the move), connecting and disconnecting utilities and shipping the car and household pets. Expenses of moving household goods or personal effects from a place other than the old residence are deductible only to the extent of what it would cost you to move them from the old residence. The cost of moving items bought en route isn't deductible.

· Expenses of travel (including lodging but not meals) from the old residence to the new. The cost of a single trip for you and for members of your household is allowed. If you use your car for travel, you can deduct either the cost of gas and oil (accurate records must be kept) or a standard mileage rate (for 2015, 23¢ per mile; for 2014, 23.5¢ per mile) plus parking fees and tolls. If you and your spouse drive separate cars, you can each deduct the expenses for one trip each. Maintenance, repairs, insurance or depreciation are not deductible.

· Lodging expenses for the day you arrive in the new area, and the cost of lodging in the old area within one day after you could no longer live in the old home because your furniture had been moved. Note that pre-move and temporary living house-hunting expenses aren't deductible.

There's no dollar limit on the amount of the expenses, but you can only deduct reasonable costs. That means the expenses can't be lavish or extravagant. And you have to move by the shortest and most direct route available by the conventional mode of transportation used and in the shortest time commonly required to travel that distance. Side trips, for example, aren't deductible.

If you are reimbursed by your employer for your expenses or if your employer pays them directly, you won't have to include the reimbursements or payments in income if you properly account to your employer and you could have deducted the expenses had you paid them yourself. (Of course, you get no deduction for any amounts you don't have to include in income.) Excludable expenses aren't included in "wages" or any other taxable amounts on your Form W-2, but excludable expense reimbursements your employer pays directly to you will appear for information purposes only in Box 12 of the W-2 as Code P.

It's important that you keep records of distances from old and new residence to old and new job, dates of travel and arrival to the new area, employment periods, and records and receipts for your moving expenses, to support your deduction.


This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided in this website is not all inclusive and such information should not be relied upon as being all inclusive.