You already know that moving isn’t any fun and worse, isn’t at all cheap. In fact, odds are if you’re reading this, you’ll moving to a new house or apartment sometime in the next few months. And when you do: it’s not going to provoke any spasms of joy from your wallet. Fortunately there’s a pretty easy way to save on moving costs: If you’re relocating because of work, you can deduct your expenses from your taxes. Yes, you read that correctly. If you moved for work-related reasons … because of you changed job locations or because you started a new job, you might be allowed to deduct certain moving expenses.
Here’s the second best part of this whole deal: The distance test and the time test that you’re required to pass to start writing moving costs off, are ridiculously straight-forward compared to kinds of IRS rules that might have popped into your head a few sentences ago. Now here’s the “best” part; you can deduct nearly every expense related to moving.
You Must Pass Both IRS Tests to Claim a Moving Expenses Deduction
First up, the 50-Mile “Distance” test. It works like this: Your move passes the distance test as long as your new primary job is located at least 50 miles farther from your former home than your former primary job was located. To determine this, simply determine the distance between your former home and your new job location then subtract the distance between your former home and your old job location. If the result’s at least 50 miles, you’re in luck and you’ve met the distance test. For instance, if the distance from your old apartment to your new job is 60 miles and the distance from your old apt to your former job is ten miles, you pass the distance test. Note: If you’re in the armed forces and you moved because of a PCS (permanent change of station), you don’t have to pass the distance test.
Next up, the 39-week “Time” test. It works like this: If you’re an employee, you have to work full–time for at least 39 weeks during the 12 months immediately following your move. If you’re self–employed, you have to work full time for a minimum of 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your move. But here the good news about that stipulation. If you haven’t “passed” the time test by the time you file your tax return, you can still deduct the expenses you incurred moving on that return if you do “expect” to pass the time test.
Sounds Great, But Which Moving “Expenses” Are Tax Deductible?
I wasn’t exaggerating above. The simple fact of the matter is: If you are moving for work, you can deduct nearly every moving related expense. Of course, to claim your due deductions accurately, you’ll want maintain detailed records. Keep your receipts for packing boxes and other moving goods, get and keep gas and toll receipts if you drive your own moving fan and remember to get a paper invoice for the bill from shipping your car. Here’s a checklist that will ensure you won’t forget any deductible moving expenses:
Deductible Travel-Related Moving Expenses
- The costs of having your car transported by professional auto movers.
- Hotel and or lodging costs along your travel route.
- The costs of a rental truck or van, as well as gas bought and tolls paid on route.
- Lodging expenses near your former home within one day of your move (If for instance you finished packing late and wanted to begin your trip after actual bed rest in the morning, you could deduct the cost of a hotel, though not meals, for one night’s stay near your old home.)
- Cost of plane tickets if you’re flying to your own home, including any baggage expenses incurred or transportation costs to the airport (but not meals at the airport or on the plane)
- Costs to transport your car to your new home
- Costs to transport pets to your new home (whether by air or car)
Deductible Household Goods Related Expenses
- The cost of “relocation” insurance or cargo insurance for a shipped vehicle.
- The costs of packing materials including moving boxes, wrap and packing tape.
- The cost of professional movers if you’ve hired a company.
- Costs related to moving items from a third location to your new house or apartment, but only up to what it would have cost you to have them moved from your home. For instance, say you need to have summer convertible transported from a storage facility that’s closer to your new home. You’ll be able to deduct the costs of having that car shipped. If however your automobile storage facility is further from your new home than your old home, just calculate the costs if you’d had the vehicle transported the from your former home, not the facility.
- The costs of storing and insuring household goods or personal effects for a period of 30 days after they’re moved out of your old home and before they’re delivered to your new home.
Deductible Utilities Related Moving Expenses
- The costs of disconnecting or connecting utilities as a result of your move.
So if you’ve passed both tests, you can deduct basically every reasonable expenses incurred moving your household possessions and personal effects to a new home. You can also deduct expenses incurred traveling to your new home, including the costs of lodging. But you won’t be able to deduct meals or any moving expenses your employer reimbursed. Your deductible moving expenses are figured on IRS Form 3903 (Moving Expenses), which is, as noted above, is about as straightforward as tax form come, and then deducted as an adjustment to your 1040 form. For additional details, download this PDF: IRS Publication 521: Moving Expenses.