Summer is a popular time to move, whether it’s so the kids don’t have to change schools mid-year, to avoid having to move in bad weather or simply because it can be an easier time to sell a home. Unfortunately, moving can be expensive. The good news is that you might be eligible for a federal tax deduction for your moving costs.
The move must be related to your work. Employees as well as self-employed individuals may be eligible for the moving expense deduction.
You also must satisfy the distance test. Your new main job location must be at least 50 miles farther from your former home than your former main job location was from the former home. For taxpayers without a former work location, the distance between the new work location and the former home must be at least 50 miles. Note that the test compares the distance of your new/old main job locations to your former home and not the distance between your new home and your former home. Therefore, your new home does not have to be 50 miles away from your former home.
Finally, there’s a time test. You must work full time at the new job location for at least 39 weeks during the 12-month period after arriving at the new location. If you’re self-employed, you must meet that test plus work full time for at least 78 weeks during the first 24 months at the new job location. (Certain limited exceptions apply.)
What Expenses You Can Deduct
Only moving expenses that are reasonable under the circumstances of the particular move are deductible. Expenses paid or incurred in excess of a reasonable amount aren't deductible.
Generally, you can deduct transportation and lodging expenses for yourself and household members while moving. In addition, you can deduct the cost of packing and transporting your household goods and other personal property. Also, you may be able to deduct the expense of storing and insuring these items while in transit. Costs related to connecting or disconnecting utilities are usually deductible, too.
But don’t expect to write off everything. Meal costs during move-related travel aren’t deductible. Nor is any part of the purchase price of a new home or expenses incurred selling your old one. And, if your employer later reimburses you for any of the moving costs you’ve deducted, you may have to include the reimbursement as income on your tax return.
Questions about whether your moving expenses are deductible? Or what you can deduct? You can reach me at HZemel@BerdonLLP.com or contact your Berdon advisor.
Hal Zemel, a Tax Partner at Berdon LLP, New York Accountants, has nearly 25 years in public accounting and advises businesses in the manufacturing, distribution, advertising, and real estate sectors.