Writing Off Moving Costs During Tax Time
The IRS provides a lot of deductions for hard working Americans like us but a lot of people are unaware of them or maybe scared of an audit. I say bring it on, as long as you have the receipts and proof to back it all up, you should take advantage of every deduction available out there. The ‘moving expenses’ deduction is one of the more valuable ones since it’s above the line, meaning you don’t have to itemize to take advantage of it.
But you can’t just move across the city to take advantage of this deduction, the move must be work related. The IRS is actually pretty smart and they require you to pass two tests: the time and distance tests. But should you meet both requirements it won’t matter whether it’s your first job, same job or a new job, you’ll still get to take the deduction.
Time and Distance Tests
The first test is to prove that you didn’t just move because you like the weather in your new city more than your old one. You must be employed full time for at least 39 weeks of the immediate 12 months after your move. The weeks don’t need to be consecutive though so you could even take a break or switch employers if you wanted to. There’s also a provision that waives this portion of the test should you be laid off or transferred.
The second test is to show that you didn’t move just to be closer to the beach. The distance between your new primary job location and your former home must be at least 50 miles greater than your old commute. So if you currently live 5 miles from your work, your new job location has to be at least 55 miles away from your current home.
Benefits of the Deduction
Now that you’ve passed both tests, what exactly can you deduct? Make sure you save your receipts because you can deduct all of the following:
- The costs to move household goods and any personal property(packing and shipping)
- The cost of traveling to your new home(only once though!) including lodging but not meals
- Actual driving costs like gas and oil or the standard 24 cents/mile rate
- Travel arrangements for pets
There are a lot of things you can’t deduct but I know I’d be much more likely to hire one of the big moving companies to help me out if the cost was tax deductible. You can get free, no obligation quotes on MovingRelocation.com.
Normally, I just ask my friends to help me out but I always feel a little bit guilty. Once you’ve piled up all the receipts it’s a relatively straight forward to complete IRS form 3903 – Moving Expenses and get your deduction.
The last thing to keep in mind is if your new employer reimburses you for moving costs you’re not allowed to take the moving expense deduction. Unfortunately, there’s no double dipping with this tax deduction since moving taxes paid by your boss are not tax deductible.
Readers, have you ever taken advantage of this tax deduction? I’ve never had to move further than a few miles since I’ve been working but I definitely plan on taking advantage of this in the future.
-Harry @ PF ProTags: IRS 3903, Moving, Moving Expenses, Tax Deduction