Get Your Moving Expenses Deducted
Moving to a new home involves a lot of planning and work, and it can be costly as well. If you are moving because you got a new job, or your current job changed location, you may be able to deduct your reasonable moving expenses on your income tax return .
Note: The moving expenses tax deduction is an “above-the-line” deduction, which means it is taken before your AGI (adjusted gross income) is calculated, instead of after like most other deductions. Above-the-line tax deductions are subtracted from your gross income and the resulting number is your AGI. Therefore, above-the-line deductions apply whether you itemize or not. Above-the-line deductions, like the moving expenses tax deduction, are designed to help protect your personal exemptions and itemized deductions from phaseouts. Because of these characteristics, above-the-line deductions are often considered to be the most beneficial for taxpayers.
Who can deduct moving expenses -- tests for eligibility
To be eligible to claim the moving expenses tax deduction, the IRS has 3 main requirements that you must meet:
• Your move is closely related to the start of work
• You meet the distance test
• You meet the time test.
Move related to the start of work
In general, you are allowed to deduct moving expenses that you incur within one (1) year from your first day of work. Your move must be closely related to both the location of your new job and the time you start the new job. According to the IRS, your move is considered to be closely related in place as long as “the distance from your new home to the new job location is not more than the distance from your former home to the new job location.” Your home refers to your principal residence, which can be a house, condominium, apartment, mobile home, or other similar dwelling.
The distance test
To qualify for the moving expenses tax deduction, your new job location must be at least 50 miles farther from your old home than your old job location. If you did not have a former workplace, your new job location must be at least 50 miles away from your old home. The IRS states that the distance should be determined by using the shortest of the most commonly traveled routes (so you won't be able to use the scenic route just to meet the mileage requirement).
The time test
To be eligible for the moving expenses tax deduction, you must also work full-time for an employer in the vicinity of your new job location for at least 39 weeks during the year following your move. It's important to note that these weeks do not have to be consecutive or with the same employer, so you are free to change jobs after you move. There are also exceptions for disability, death, involuntary separation, and other special situations. Additionally, if your employer transfers you or fires you after you move, the IRS will overlook the 39-week requirement.