You've read the rules on which movers qualify to deduct their moving expenses 10 times over and you're positive your relocation qualifies for moving expense tax deductions. What now?
If you're certain all three rules for taking deductions have been met, you can move on to figuring out what kinds of expenses are allowable and which ones aren’t. To help figure out the bottom line, IRS Form 3903 is often useful and even required in some cases. IRS Publication 521: Moving Expenses may also be helpful.
There are some basic generalizations about what is allowed for deduction and what types of expenses are not. Movers who qualify should be certain to keep a running tally and save receipts whenever possible to ensure they can account for all allowable deductions.
Deductible Moving Expenses
The IRS allows deductions related to move that it deems "reasonable." This means, for example, the route from the old house to the new one must be the shortest, or it must be claimed that way.
Things to keep track of include:
- Travel expenses. If you drive, you can keep receipts for oil and gas or you can take the standard mileage deduction. This applies if you use personal transport to convey yourself, members of your household or your personal items to the new home.
- Lodging. Lodging during a home is generally an acceptable deduction, but food and entertainment are not. You're on your own if you sightsee.
- Expenses related to your belongings. Deductions allowed in regard to personal belongings include such things as the cost of disconnecting and disconnecting utilities, the shipping of a car and family pets, and even the cost of packing, crating and transporting goods.
- Storage expenses. Deductions are allowed to offset the cost of storing and even insuring household property and personal items within any 30-day period that is consecutive with the day of the move from your former home until the time they arrive at the new one.
Non-Deductible Moving Expenses
While the IRS will help people help themselves to better jobs in new and exciting locations, the agency doesn't let everything count as a deduction. The things that are not allowed, include:
- Mortgage and lease-related costs. The IRS does not allow down payments, real estate taxes, mortgage penalties and security deposits to be considered as part of allowable moving expenses. Some of these items might be deductible elsewhere, however.
- Licensing fees. You're on your own with car tags, driver's license fees and so on.
- House hunting expenses. The costs you incur when looking for a new home fall on you, as do expenses related to setting up the home.
Moving can be a rather costly adventure. Fortunately, the IRS does allow qualified movers to recover some of their expenses. Learning what to deduct and what to avoid can help you offset some of your moving expenses while keeping you out of trouble.
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.
