Moving Resource Center
Tax Break
Both renters and homeowners can qualify. If your new job location is at least 50 miles farther away from your old home than was your new job location, then you can deduct residential moving costs regardless of the distance from your new home to your job site.
For example, suppose your old home was 20 miles from your job site. To qualify for the residence moving expense tax deduction, your new job location must be at least 70 miles (50 + 20) from your old home. Meet this simple distance test and most of your household moving costs become tax deductible. This tax break is available whether you take the standard deduction or itemize your deductions.
If you passed the basic distance test, the next moving expense deduction test requires you to work full-time in the vicinity of your new job site at least 39 weeks within the 12 months after the job location change. You need not continue working for the same employer, nor must the 39 weeks of work be consecutive. But the time spent looking for work doesn't count. Either spouse can qualify, but one spouse's work time cannot be added to the other's.
Self-employed taxpayers must work at least 78 weeks full-time in the vicinity of the new job location within 24 months after the change. However, at least 39 of these work weeks must be within the 12 months after a residence change. These work-time tests usually stop students and hobbyists from qualifying by working just a few hours a week. But disability, job layoffs or the taxpayer's death are reasons the IRS will waive the work-time test.
Delay
If you delay changing your residence for up to a year after the qualifying job site change, your moving cost deductions are still safe. But moving expenses incurred more than a year after the job location change usually require justification.
IRS Revenue Ruling 78-200 allowed a moving expense deduction 30 months after the husband began his job. The delay was so the children could finish school at their old location. However, part of the moving expenses were incurred within a year after the job location change.
If you pass both the distance and time tests, your direct moving costs become deductible. Examples are expenses of moving household furniture and clothing, family transportation costs (but not meals en route), lodging en route, and the costs of driving your car.
Either 10 cents per mile auto expenses or your actual gas, oil and repairs (but not depreciation) for the moving trip are deductible. Additional examples of deductible direct expenses include the costs of shipping a pet or car, packing and crating fees, in-transit storage of up to 30 days, and insurance. But house-hunting and premove indirect costs are not deductible.
Employer Reimbursements
If your employer gave you a moving allowance, such as $3,000, it is fully taxable as income. Of course, your direct moving expenses are deductible, perhaps eliminating any tax on the reimbursement. However, if you reported deductible moving costs to your employer who then reimbursed you for actual expenses, the reimbursement is not taxable income to you. But employer reimbursements for nondeductible expenses, such as loss on the sale of your home, are taxable income for to you. Armed Forces members qualify for special moving cost reimbursements.
