Write-Off Moving Expenses on Your Tax Return

Moving can be a costly proposition and it’s one that’s usually filled with anxiety as well as anticipation. There are many kinds of companies, offering a variety of services and different rates. Some moving companies charge by the room, others by amount, and still others use hybrid pricing.

Regardless of which one you choose, you’re going to spend at least a few hundred dollars for a short distance haul or a couple thousand or more for a long distance move. One of the ways to cut down on the cost is to thin-out your possessions, selling-off things you don’t use and hosting a yard sale. Another smart step is to give stuff away to charity, that will not only cut-down on the amount of stuff you move, it will allow you to take tax deductions.

Speaking of write-offs, the IRS allows you to deduct certain expenses, that is, if you meet some requirements. Like all other deductions, there are stipulations which much be demonstrably met or you might get a letter in the mail months, even years later, stating your tax return contained ineligible deductions and a bill along with it.

Have a Professional to Look Over Everything You Write-Off

If you do meet the IRS requirements and elect to write-off moving expenses, be sure to have your return reviewed by a professional tax adviser or an accountant. Because the laws change from year to year, what might be true now might not in just a few months. Another piece of sage advice is to keep all your receipts and be sure to make copies.

“To write off your relocation costs, a move must be work-related. Then you have to pass the time and distance tests. But as long as a move meets these requirements, it doesn’t matter if it’s your first job, the same job or a new job. And while you have to use the long Form 1040 to claim the moving costs, you don’t have to itemize any other deductions. The costs are detailed on Form 3903 and the total transferred to the adjustments to income section of your return. There is no Schedule A to complete, no percentage-of-income thresholds to meet and no tax-deduction phase outs because you made too much money.” —Bankrate.com

The most current information about tax deductions for moving expenses can be found on the agency’s website. The rules and forms are available in IRS Publication 521, Moving Expenses. You can see the material online or download a PDF to have handy when you’re ready to file your income taxes.

Rules and Tax Deductions Related to Moving

As stated, there are requirements you must meet in order to qualify expenses as deductible. Here’s what you need to know about eligibility and which expenses are allowable write-offs:

  • Your moving expenses must be job-related. That’s the first qualifier and if you are moving from one home to another for any other reason, that doesn’t make you eligible. If you are married, only the spouse who is moving for their job is eligible, in other words, you can’t double-dip, so-to-speak.
  • You must be employed for 39 weeks after the move. At your new location, you must be employed full time, but it doesn’t have to be the same employer from the area you left. If your employment ends or you change jobs during that 39 week period, you won’t qualify.
  • You must have a 50 mile commute. This is where geography and commute come into play. While you don’t have to demonstrate an out-of-state move for your job, you can’t move from one block to the next. The rule is that your new home must be at least 50 miles from your job. Confused? Well, here’s an example: let’s say you lived 7 miles from work in your old home. Your new home must be at least 57 miles away. Of course, if you move out of state or to another far away county, this won’t be an issue.
  • You can’t take credit for employer reimbursement or assistance. If you pay for the job-related move out of your own pocket, then you are eligible to take the deductions. However, if your employer reimburses you, those write-offs are off limits. In addition, if your employer contributes a percentage of covering the expenses, you might be able to deduct only certain costs you covered or might not meet the requirements at all.
  • You can be self-employed and still be eligible. Self-employed individuals can take the deductions, but you have to meet the 39 weeks and 50 mile requirements. The catch is you might be subject to a longer time requirement, having to demonstrate 78 weeks of full time employment.

Lastly, if you have pets or are moving with other members of your household, such as children, expenses incurred for them are also eligible for deduction, though there are restrictions. In addition, you can deduct other expenses, such as insurance costs, utility connections and disconnections, as well as storage fees.