Have you moved because of your job? Taxpayers may be able to take deductions for moving expense on their tax return. To be able to take deductions for the expenses, the move must be to begin a new job or for the same occupation/employer in a new location. Here are some things to consider when contemplating taking deductions for moving expenses on your tax return.
To deduct moving expenses, there are three requirements:
1. The move must very much relate to the start of work. Moving expenses within one year of the start date at a new job location are typically deductible. There are other rules that apply to this requirement.
2. The move must be a certain distance. The distance from your new job and your former home must be at least 50 miles farther than your previous workplace was from your previous home. For example, if you used to commute 5 miles from home to your old workplace, your new workplace must be at least 55 miles from your old home. When it is your first job or you were unemployed, the job location must be at least 50 miles from your old home.
3. Employment time test. After the move, you must work full-time at your new job for at least 39 weeks the first year. For taxpayers who are self-employed, the amount of the time test is increased. Self-employed must work full-time for a total of at least 78 weeks during the first two years at the new job site. When the income tax return is due before this test has been met, you can still take deductions for moving expenses if you expect to meet it.
When these three requirements are satisfied and you are able to claim this deduction, here are a few types of moving expenses to consider when completing your tax return:
Travel- Transportation and lodging expenses for you and members of you household while moving from the old home to the new home are deductible. Travel meal costs are not deductible.
Household contents and utilities- The costs of packing, crating and shipping your things are deductible. You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home. The cost of connecting or disconnecting utilities is also deductible.
Certain expenses that are not deductible- Taxpayers cannot deduct as moving expenses any part of the purchase price of a new home or the cost of selling a home, or the cost of entering into or breaking a lease.
Reimbursed expenses- When the employer later pays for the cost of a move that has been deducted on your tax return, you may need to include the payment as income. The taxable amount is income in the year the payment is received.
Address Change- To update your address with the IRS a file Form 8822, Change of Address.