Job-related moves can cost a lot, but some moving expenses can be tax-deductible. These costs are deducted on your Form 1040 when figuring adjusted gross income (AGI) on your Federal income-tax return. Your employer may reimburse you for all or part of your moving expenses. Reimbursement for deductible expenses is not taxable, but does reduce your deduction for moving expenses on your return.
To deduct the moving expenses on your tax return, you must meet the following two tax tests:
• The 50-mile distance test, and
• The time test for remaining in your new location.
Your new workplace must be at least 50 miles further from your old home than your old workplace was from your old home. For example, you commuted 25 miles from your old house to your old job. Now, you found a new job 75 miles away from your old home. Your commute to your new job is at least 50 miles further than your old commute (75 miles as compared to 25 miles). Therefore, you can deduct your moving expenses.
You must also work full-time as an employee in the general location of your new home for at least 39 of the 52 weeks following the move for which you want to deduct moving expenses on your tax return. If you are self-employed, you must work at least 78 weeks in the 24 months after your move. However, if you are relocating to the United States from another country as a retiree, you can deduct your moving costs without needing to start a new job in the USA. In other words, retirees from abroad do not need to meet the “time” test.
Additionally, if you are married and file jointly, only one spouse needs to meet the time and distance tests. If you do not satisfy the work requirements by the filing deadline, you may still deduct your moving expenses—if you expect to meet the requirements in the next tax year. If you claim the deduction but fail to complete the requirements, you will need to report the amount as income in the next tax year (or amend your prior return).
If you are member of the armed services and your move was due to a military order and permanent change of station, you do not have to satisfy the “distance or time tests.”
If the above two tax tests are met, you may deduct the following expenses on your return:
• Travel costs of yourself and members of your household en route from your old location to your new location; and
• The actual cost of moving your personal effects and household goods.
• Uncle Sam even lets you write off the travel arrangements you make to get your household pets to your new home.
Actual car expenses such as gas and oil are tax-deductible if accurate records are kept, or you can take a deduction of 17 cents a mile for the 2017 tax year. Tolls can be added to both methods.
Report your tax-deductible moving expenses on IRS Form 3903, Moving Expenses. The amount of deductible moving expenses from the form is then entered on Form 1040, page 1, as an adjustment to income.
For more information on deductible and nondeductible moving expenses, refer to IRS Publication 521, Moving Expenses.
Barry Lisak is an IRS Enrolled Agent, meaning that he has passed special U.S. Treasury Department exams that qualify him to represent clients dealing with audits or tax-resolution cases. Any questions can be directed to him at (516) TAX-SAVE, or firstname.lastname@example.org.