When big relocations take place, the most common reason for the move is a new job. While some employers pick up the tab, not all do. When movers are required to eat the bill, there is an outlet to regain some of the loss: The IRS allows some moving expenses to be deducted from taxes.
Qualifying for moving expense deductions can be a little tricky, however. There are three conditions that typically must be met in order for movers to qualify to deduct their moving expenses. They are:
- A move must be closely related to the start of the new job in time span. The rule of thumb is within a year in most cases.
- A distance requirement must be met. This one can be a tad bit confusing. The rule is that distance to the new job must be at least 50 miles farther away from home than the old job. This means if your old job was 10 miles from your old home, your new job must be at least 60 miles away from the old home for the new one to qualify.
- Time test. There is a time test for movers who are employed by others and for those movers who are self-employed. This test must be met for deductions to be valid. For example, a full-time employee needs to work for at least 39 weeks during the first year following a move to qualify. The exceptions here include not having to work for the same employer and not having to work all 39 weeks in a row. For self-employed people, the 39-week rules applies, but there is a little more tacked on. A total of 78 weeks during the first 24 months must be worked to qualify. Deductions can be taken before the time test is met in either scenario, but if that test ends up not being met, the deduction from one year must be counted as income the next. The other option is to amend the initial return.
Once these three rules are met, the door opens for a whole host of tax deductions directly relating to the relocation. Things such as the actual moving and storage of household goods, travel and lodging are all allowed. Some deductions apply for those movers who are moving not only inside the United States, but also outside. Military personnel have their own set of rules to an extent.
Moving for a new job can be a rather costly venture. When an employer doesn't have it in the budget to help out, don't despair. Some of the costs can be recouped through tax deductions. Even when employers do pay for parts of the move, other portions just might be deductible, as well.
More Information in the Movers' Tax Guide
Special Movers' Tax Guide Note
Our Movers' Tax Guide is intended to provide you with helpful information on who quailifies to deduct moving expenses, which expenses are deductible and how to claim these deductions. For further clarification, movers are encouraged to seek additional information from the US Internal Revenue Service and/or to consult with their tax professional.
Movers who believe they may be qualified to deduct some of the costs of their move are also encouraged to consult
IRS Form 3903, which is often useful and even required in some cases, as well as IRS
Publication 521: Moving Expenses.
