How To Deduct Moving Expenses from Taxes
If you moved for work this year, you may be in luck - there's a chance you can deduct your moving expenses while doing your taxes, even if you don't itemize your deductions. But, what does "there's a chance" really mean? The IRS has set up two tests that you must pass in order to be eligible to write off your moving costs:
1. The 50-mile test. You will pass this test if the location of your new job is at least 50 miles from your former home.
Example: If your old job was 20 miles from your former home, then your new job must be at least 70 miles form your former home.
2. The time test. You will pass this test if you are a full-time employee for 39 weeks during the first year you're at your new home. This is to prove to the IRS that you moved for your job and not just because you felt like moving.
To pass the time test, you don't have to work at the same position for the entire year, you simply have to work in the new area for the required time (at least 39 weeks of the first 12 months).
There are, however, a few exceptions to this test. If the unlikely happens - maybe you become disabled or you're laid off - you are still eligible for a deduction. Just be sure to let the IRS know right away!
If you pass both the time and the 50-mile test, you can deduct all the costs of moving. Here's a partial list of items you can possibly deduct:
- Professional movers
- Storage while in transit
- A hotel along the way
- Car shipping
- If you decide to drive yourself, you can deduct your mileage and gas
- Cost of connecting and disconnecting utilities for 30 consecutive days after your move
Here's a partial list of items you cannot deduct:
- Closing costs
- Mortgage fees
- Real estate commissions
- Cost of applying for a new lease or breaking an old one
- Loss of your security deposit
- Living expenses in your new city
- Renovations at your new home
- Storage once you've moved in - you can only deduct storage costs while in transit
If your employer is covering your moving expenses, you may not eligible to deduct anything at all. If this is the case, you'll want to reference IRS Form 3903.
For a full list of all deductible and nondeductible expenses, visit the IRS Publication 521 on moving expenses.