Published: May 15, 2023

When Can You Claim Moving Expenses as a Tax Deduction?

Moving can be an exciting and hectic experience, filled with new opportunities and fresh beginnings. However, it can also be a costly endeavor. Thankfully, under certain circumstances, you may be eligible to claim your moving expenses as a tax deduction. This blog post will guide you through the criteria and requirements for claiming moving expenses on your taxes.

The Distance Test

To be eligible for a tax deduction on your moving expenses, your new job location must be a certain distance away from your previous home. In general, the distance between your old home and your new workplace must be at least 50 miles greater than the distance between your old home and your old workplace. For example, if your previous commute was 10 miles, your new commute must be at least 60 miles.

The Time Test

Apart from the distance requirement, you must also meet a time test to qualify for moving expense deductions. This test states that you must work full-time for at least 39 weeks during the 12 months following your move. These weeks of work can be with multiple employers, and they don’t need to be consecutive. If you’re self-employed, you must work full-time for a total of 78 weeks during the 24 months following your move, with at least 39 of those weeks falling within the first 12 months.

Starting a New Job or Transferring With Your Current Employer

To claim moving expenses, you must be relocating due to a new job or a job transfer with your current employer. If you’re starting a new job, it should be in the same trade or business as your previous employment. For self-employed individuals, the requirement is that you continue to work in the same trade or business in the new location.

Deductible Expenses

The expenses that qualify for deduction include transportation costs (such as mileage, tolls, and parking fees), storage and shipping costs, and travel expenses (including lodging and meals). However, it’s important to note that only reasonable and necessary expenses directly related to the move are deductible. Non-deductible expenses may include house-hunting trips, temporary living costs, or meals during the move.

Recordkeeping

To claim moving expenses, it is crucial to maintain thorough records. Keep all receipts, invoices, and relevant documents related to your moving costs. This documentation will help you accurately report your expenses when filing your taxes.

Filing Process

To claim moving expenses, you must use IRS Form 3903 (Moving Expenses) when filing your federal income tax return. Ensure that you complete the form accurately, providing all necessary information and supporting documentation. Consult a tax professional or refer to the IRS guidelines for specific instructions on filling out the form.

Moving can be a costly endeavor, but knowing the rules surrounding tax deductions for moving expenses can help alleviate some of the financial burden. If you meet the distance and time tests, have a new job or job transfer, and adhere to the deductible expenses, you may be eligible to claim your moving expenses on your tax return. Remember to maintain proper documentation and consult with a tax professional if you have any doubts or questions. With careful planning and adherence to IRS guidelines, you can make the most of available tax deductions and minimize the financial impact of your move. For more information, visit UNITS Moving and Portable Storage of Northeast Kansas.