What Moving Expenses are Tax Deductible
If you meet the IRS requirements for moving expenses, those expenses are Tax Deductible. These moving expenses that are deductible include traveling costs, lodging expenses, cost of packing, cost of transporting your car as well as other expenses
You may deduct un-reimbursed expenses of moving your household goods and traveling to a new job locations if you meet the IRS requirements.
Requirements for Moving Expenses
If you move to a new “principal place of work” during the year you may be able to deduct your moving expenses. These moving expenses are “reasonable expenses” of moving your “household goods and personal effects” from your former residence to your new residence.
The requirements for Moving Expenses are as follows:
- 1. Your move is closely related to the start of work – Your move must be closely related, both in time and place, to the start of work at your new job location. Essentially, you need to move within a year of starting your new job. If you do not move within 1 year of the date you begin work, you ordinarily cannot deduct the expenses unless you can show that “circumstances” existed that prevented the move within that time.
An example of a special “circumstance” could be that delayed your move in order to let your child complete high school.
- 2. You meet the distance test – The distance between your new job location and former home must be at least 50 miles more than the distance between your old job location and your former home. Thus, if your former job was 15 miles from your former residence and your new job is more than 65 miles from your former residence you will qualify for the moving expense deduction.
- 3. You meet the time test – If you are full time employee, you must work full time for at least 39 weeks during the first 12 months immediately after you arrive in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after your arrive in the general area of your new job location.
You can ignore the “time test” if :
- – You are in the armed forces and moved because of a permanent change of station.
- – Your job at the new location ends because of death or disability.
- – You are transferred for your employer’s benefit or laid off for a reason other than willful misconduct.
If you are in the Armed Forces and you moved because of a permanent change of station, you do not have to meet the distance test.
More Than One Job
If you have more than one job at any time, you main job location depends on the facts in each case. The most important factors to be considered are:
- The total time you spend at each place.
- The amount of work you do at each place.
- How much money you earn at each place.
What Are Deductible Moving Expenses
If you meet the requirements you may deduct the following expenses:
- Traveling costs from the old home to the new home. If you use your own car, you may either deduct the actual cost of gas, oil, and repairs during the trip, if you keep an accurate record of each expense, or take a deduction based on the rate of 24 cents.
- Lodging expenses
- The cost of packing, crating, and transporting furniture and household belongings from your old home to
your new home.
- The cost of storing and insuring your household goods for up to 30 consecutive days during the move.
- The cost of transporting your car or moving your pet to your new residence.
- The cost of connecting or disconnecting utilities when moving household appliances.
- Parking fees and tolls
There is no dollar limit on the amount of expenses but they must be “reasonable”. You must also move by the shortest, direct route available in the shortest time required to travel between your old home and new home. So if you are planning to move from Washington to California, you can’t take a side trip to Hawaii.
Standard Mileage Rate for Moving Expenses
The standard mileage rate for moving expenses for 2013 is 24 cents per mile for miles driven.
The 2014 standard mileage rate is 23.5 cents per mile for miles driven for moving purposes.
Nondeductible Moving Expenses
The following expenses are not deductible:
- Any part of the purchase price of your new home.
- Meal Expenses.
- Temporary living expenses.
- Real estate taxes.
- House hunting expenses.
- Expenses incurred in the buying or selling of your new home.
- The cost of connecting a telephone in your new home.
- Car tags.
- Driver’s license.
- Expenses of buying or selling home (including closing costs, mortgage fees, and points).
- Expenses of entering into or breaking a lease.
- Home improvements to help sell your home.
- Loss on the sale of your home.
- Losses from disposing of memberships in clubs.
- Mortgage penalties.
- Pre-moving house hunting expenses.
- Real estate taxes.
- Refitting of carpet and draperies.
- Return trips to your former residence.
- Security deposits (including any given up due to the move).
- Storage charges except those incurred in transit and foreign moves.
No Double Deduction
You cannot take a moving expense deduction and a business expense deduction for the same expenses. You must decide if your expenses are deductible as moving expenses or as business expenses. For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. Generally, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for one year or less.
Claiming Deductions Prematurely
If the due date for filing your tax return arrives before you can satisfy the 39 week test, you may still deduct un-reimbursed moving expenses. If you subsequently fail to meet the time test requirement you will have to file an amended return to eliminate the deduction or report income.
If your employer reimbursed you for your moving expenses, or if your employer pays for them directly, you don’t have to include your reimbursements or payments in your income. Moving expenses that your employer pays to a third party, a moving company, for example, are not reported as income either.
Reimbursements for expenses that do not qualify for a deduction, meal expenses for example, should be reported as income.
Loss of Job
If you lose your job for reasons other than your willful misconduct, the 39-week requirement is waived. If you resign or lose your job for willful misconduct, a part-time job will not satisfy the 39-week text.