Consider Your Tax Deductions When Relocating
Federal tax law allows you to deduct your moving expenses if your relocation is part of starting a new job or included in a job transfer with your current employer. To qualify, your new job location must meet the minimum distance from your old home. You must also start work at your new job or position shortly after arriving in your new location.
Distance Related Qualifications
The expenses incurred for moves within the same town or city don’t qualify. The distance between the new job and your former house has to be at least 50 miles further than your previous job position (or employer) is from that home. For example, if your old commute was 10 miles round-trip, then the distance from your new job to your old house must be at least 55 miles.
*Keep in mind that the IRS will require you to use the shortest distance available when calculating the distance qualification!
You absolutely must work full-time for at least 39 weeks of the possible 52 weeks during the first year of your new job, starting on the day you arrive at your new home location. The work weeks do not have to be consecutive and you ARE NOT REQUIRED to work for the same employer, but you must be working full-time to be eligible.
*The IRS doesn’t specify the exact # of days per week or the # of hours per week to be considered full-time; instead, it defers to industry standards.
Deductible Moving Costs
The deduction covers REASONABLE EXPENSES you incur to transport your family, pets, belongings and household items to your new home. You can also include costs of storage within 30 days of the date of arrival to your new location. You can also include lodging en route of the move to your new home.
Appropriate Timing of your Claim
To claim the deduction, you must report all eligible expenses on IRS Form 3903 and attach it to the tax return that covers THE YEAR OF YOUR MOVE. In the event you don’t satisfy all of the requirements at the end of the 12-month period, you won’t be able to claim the deductions. Your alternative option will be to either include the original deduction amounts in “other income” on your subsequent tax return or you can simply amend the original to calculate taxes without the moving expense deductions.
This article is current as of May 2013. Please be sure to follow current requirements whenever considering whether or not you qualify for a deductible!