In today’s economy more and more people are willing to relocate for a new job opportunity. Fortunately, the IRS has setup a special deduction to help taxpayers offset the high costs associated with relocating your family for a job.
Deductible Expenses
Examples of moving-related expenses that can be deducted include:
- Packing and transportation costs for moving household goods
- The cost of shipping goods from a place other than your former home (such as a storage unit)
- Any storage bills, or fees for disconnecting or reconnecting utilities
- All move-related travel expenses (such as mileage, tolls, lodging, parking fees, etc.)
- Expenses of shipping or relocating your car and pets to your new home.
Expenses that can NOT be Deducted
Although there are a number of expenses that you can deduct, there are even more that can NOT be deducted. To help our readers avoid claiming incorrect expenses, we put together the following list of expenses you cannot deduct:
- License plates and registration for your car
- Any part of the purchase of a new home, or expenses of leasing a new apartment
- Real estate taxes, or lost security deposits
Relocation Rules
According to the IRS “you can generally consider moving expenses incurred within one year from the date you first reported to work at the new location as closely related in time to the start of work. It isn't necessary that you arrange to work before moving to a new location, as long as you actually do go to work.”
Time Test
To qualify for the deduction you must work full time for at least 39 weeks during the first year after starting the new job. You do not necessarily have to work for the same employer, and you do not need to work for 39 weeks consecutively. However, you will need to work full time within the same commuting area for 39 full weeks.
Distance Test
In order to pass the distance test your new work location must be at least 50 miles further from the former home than the old job was. This means, if your old workplace was 5 miles from your house than the new position will need to be at least 55 miles away.
Claiming the Deduction
To claim the deduction you will need to complete IRS Form 3903, “Moving Expenses.” After you complete the worksheet, you will need to enter the final result on your IRS Form 1040 on Line 26. Then, make sure you attach Form 3903 to your tax return when you file.