Tax Deductions for Moving
Given the differing and expanding job opportunities located in various parts of the country, few people now spend their lives living in a single location. If you’ve moved, or are planning to move, because of a change in your job or its location, did you know that you may be able to deduct your moving expenses on your tax return? In order to qualify, your move must be closely related to the start of work, and it must meet both the distance and time tests.
The Distance Test
In order to satisfy the distance requirement, your new job location must be at least 50 miles farther from your former home than the location of your old job. For example, if you traveled 5 miles from your former home to get to your previous job, your new place of employment must be at least 55 miles from your previous home in order for you to qualify. If your new job is located 50 miles from your former residence but your previous work location was 10 miles from your former residence, you would not meet the distance requirement.
It is important to note that the distance test only considers the location of your former home and your work locations; it does not take into account the location of your new home. Your principal job location is defined as the place where you do most of your work and spend most of your time on the job. A new principal job location is a new place where you will work on a permanent, not temporary, basis. Also, the distance between your former home and a job location must be the shortest of the most commonly traveled routes between them.
The Time Test
If you are an employee, you must work full time for at least 39 weeks during the first year after your move in order to qualify for the deduction. The definition of full-time employment may vary according to your occupation. Seasonal workers are considered to be working full-time in the off-season if the off-season period is less than 6 months. For example, if you are a teacher on a 12-month work contract, you must teach for 6 months to be considered a full-time employee for the entire 12 months. It is important to note that you do not have to work for the same employer for all 39 weeks, nor do you have to work the weeks consecutively. You are also considered working during a week that you are temporarily absent from work due to illness, natural disaster, strikes, or a leave provided in your work contract or agreement. If you are self-employed, you must work full time for at least 39 weeks during the first year and at least 78 weeks during the first two years after your move.
The time test does not apply if your job ends because of disability, you are transferred for your employer’s benefit, or your employment is terminated for reason other than willful misconduct. Neither the time nor the distance tests apply if you are a member of the armed forces and your move is due to a permanent change of station. Different rules may also apply if you are a retiree or survivor moving into the United States from a foreign country or if you are moving to a foreign country for work reasons.
If you meet the requirements, you can deduct the reasonable expenses of moving your household goods and personal effects from your old home to your new home. These include the cost of packing, crating, and transporting your property. You can also deduct the cost of storing and insuring your possessions for any period of 30 consecutive days after goods are taken from your old home and before they are delivered to your new home. It is important to note that you cannot deduct the costs of moving furniture or appliances you buy on the way to your new home.
The expense of traveling to your new home is also deductible. This includes transportation and lodging expenses incurred while traveling from your old home to your new home and on the day you arrive at your new home. You can deduct traveling expenses for only one trip to your new home for yourself and members of your household; however, you do not have to travel at the same time.
If you use your own car for your move, you can determine the total amount of your deductible travel expenses in one of two ways: 1) You can deduct your actual expenses, such as gas and oil for your car, if you keep an accurate record, a receipt, of each expense; or 2) You can use the standard mile rate, set at 23.5 cents per mile in 2014. Under either method, you may add all parking fees and tolls to the amount of the deduction. You cannot deduct any part of maintenance, repairs, or depreciation for your vehicle as a part of moving expenses.
If you are reimbursed by your employer for any of the above expenses, you must reduce your deduction by the amount of the reimbursement. If you decide to stop over or make side trips for sightseeing during your move, the costs of these additional expenses are not deductible. The costs of meals also do not qualify.
In today’s mobile society, you may at some point decide to move to a new city in order to take advantage of a better job opportunity. Be sure to consult your tax professional at that time to determine what expenses, if any, may be deducted from your taxes as a result of your job-related move.