This blog entry is the eighth in a continuing series of major events in life that should be taken into account on your federal income tax return before you submit it to the Internal Revenue Service (IRS). This entry specifically covers moving and related expenses. For further reading on moving and the possible impact on your federal income taxes, see the IRS’s publication on moving.
Requirements to Qualify
Moving expenses are typically deductible from your federal income tax only when the expenses are associated with you starting a new job or when your current job moves to a new location. For moving expenses to be deductible for tax purposes, your moving expenses associated with starting a new job or your current job relocating must meet the following requirements:
Time Related to Start of Work
The move must occur within one year of the first day you start working at the new job or at the new job location.
An exception may be made to the one-year timeframe requirement if you have a legitimate reason for delaying the move longer. For example, if it will take longer than one year for your child to complete high school in the school district where he has always attended school, you may be granted an exception to the one-year time requirement.
Distance from Work
Your new job or job location must require that you drive at least 50 additional miles each way than does your current job or job location. For example, if you currently drive 10 miles to your job, your new job or job location must require that you drive at least 60 miles one way for a move to be deductible on your federal income tax.
Time Actually Worked
If you are an employee, you must work at the new job or job location for at least 39 weeks out of the first 52 weeks after you move. If you are self-employed, you must work at the new job or job location for at least 78 weeks out of the first 104 weeks after you move.
Because you may not meet the time actually worked requirement before it is time to submit your tax return, you may claim moving expenses if you are on track to meet the time requirement and reasonably believe you will meet the time requirement. If you later fail to meet the time requirement, you may have to amend your tax return.
If you meet the above requirements, you may deduct qualified moving expenses. Qualified moving expenses include the following expenses:
- Those associated with moving your household contents and any of your personal possessions
- Travel expenses (excluding meals) for you and your family to reach your new home
Examples of expenses that are not deductible include any of the following:
- Price for purchasing your new home
- Costs associated with buying a new home or selling your old home, including repairs necessary to make your old home ready to sell
- Costs related to house hunting or making additional trips back to your old home after your move
- Penalties or other fees associated with breaking a lease or terminating a mortgage early
- Any qualified moving expenses for which your employer reimburses you for the full amount of your expense
If you are considering a job change or relocation or you have already made either of these changes and you have questions about how it impacts your federal income tax return, a tax attorney can answer your questions and help you complete your tax return accurately.
- Federal income tax significant events, Part 7 – Purchasing a Home (taxlawhome.com)
- Federal income tax significant events, Part 6 – Retirement (taxlawhome.com)
- Federal income tax significant events, Part 5 – Disabilities (taxlawhome.com)
- Federal income tax significant events – Disasters and Theft (taxlawhome.com)
- Federal income tax significant events, Part 3 – Job Change (taxlawhome.com)
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.