Which Moving Expenses Can I Deduct on My Taxes?
We don’t mean to be the bearers of bad news here, but it’s that time again: tax season. The one part of the year when everyone except CPAs gets a look of dread in their eyes, anticipating all the expenses they’ll have to calculate—and all the money they’ll have to pay out of their pockets.
The good news, though, is that if you moved this year, you may be eligible for a generous tax deduction. Many moving expenses are totally tax deductible, which can shave a whole lot of your final tax liability. Here’s what you need to know about claiming them.
A Quick Note About Moving Expenses
If you moved to Austin just for the cool vibe, you may not be entitled to a deduction on your taxes. Moving expenses only count if you incur them relocating for a new job. And if you’re just moving across town after a career upgrade, those costs may not qualify, either. The IRS only allows you to deduct moves if the distance between your new home and your previous job is 50 miles longer than your old commute. Basically, the IRS wants you to prove that you had to move in order to make it to your new job.
Likewise, your new job needs to stand the test of time, as well. In other words, you’re required to work at the new job full-time for at least 39 weeks out of the 12 months after your first day. So if you start your new position on April 15, you need to work for about 10 months between then and the following April 15 in order to qualify. The definition of “full-time” is a little bit loose, though: the IRS accepts whatever’s considered standard in your industry. Now that you’ve checked to see whether your moving expenses are eligible, keep reading to find out which ones you can deduct come tax time!
What Kinds of Things Are Deductible?
Generally, you can include any expenses related to transporting your belongings and your family to your new location. That means whatever you pay to professional movers; or for moving supplies like tape, boxes, and bubble wrap; money you spend for help moving boxes or packing; the costs of insurance and moving coverage; gas and oil or mileage if you drive your car to the new house; and travel expenses, excluding meals, for one trip to your future home. You can also tack on the cost to rent a storage facility for 30 days. And you can deduct the amount you pay to disconnect your utilities and have them established at the new address. Additionally, if you have to stay at a hotel for a night because your furniture was moved ahead of time, you can deduct the bill for that lodging as well.
What Kinds of Things Are Not Deductible?
It’s important to note that the IRS doesn’t allow you to deduct every expense you rack up throughout the moving process—necessary as those these costs may seem to you. For instance, any meals you purchase throughout the trip are not included. Likewise, you cannot deduct house hunting expenses, or costs associated with selling and purchasing your new home—at least, not as moving expenses. Security deposits for leases and cleaning fees aren’t covered either.
Exceptions to the Rules
If your new employer covers the cost of your move, consider yourself lucky! You won’t have to sift through months-old receipts to calculate your moving costs. However, you also won’t get to claim these expenses on your taxes. You cannot deduct moving expenses that were paid for by your employer.
Another unique circumstance? If you’re a member of the armed forces who was asked to move on assignment, you do not need to meet the time and distance eligibility requirements in order to deduct your move.
Make sure to read IRS Publication 512 before you file—that way, you know you’ll have all your ducks in a row. Report your moving expenses on Form 3903, and make sure to complete Form 8822 to list your change of address, as well. The extra paperwork is not what you’d call fun, but it’s definitely worth it if it saves you on Tax Day!