Deducting Business-Related Moving Expenses
If you have to move due to a change in your job or business location, you may be able to deduct your moving expenses.
If you have to move due to a change in your job or business location, or because you start a new job or business, can you deduct the cost from your taxes? It depends.
You can deduct your moving expenses only if you satisfy two tests:
- the distance test, and
- the time test.
To deduct your moving expenses, your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from your former home. If you had no previous workplace, your new job location must be at least 50 miles from your old home. If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home.
If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location.
There are exceptions to these rules in case of death, disability, and involuntary separation, among other things.
What Expenses You Can Deduct
If you qualify for the moving expense deduction, you can deduct all your reasonable moving expenses including:
- the cost of packing and transporting your household goods and personal effects
- costs you incur to connect or disconnect utilities
- the cost of storing your household goods for up to 30 days after the day your things are moved from your former home and before they are delivered to your new home
- the cost of travel and lodging for yourself and family during the move, and
- your car expenses if you move by car--you can either deduct your actual expenses for gas and oil, or deduct 23 cents per mile.
You cannot deduct any of the following expenses:
- cost of meals while you move
- expenses that are reimbursed by your employer that are not included in your income
- any part of the purchase price of your new home
- car tags or driver's license fees
- expenses of buying or selling a home (including closing costs, mortgage fees, and points)
- expenses of entering into or breaking a lease
- home improvements to help sell your home
- loss on the sale of your home
- pre-move househunting expenses
- refitting of carpet and draperies
- return trips to your former residence
- security deposits (including any given up due to the move), or
- side trips for sightseeing during the move.
How to Deduct Moving Expenses
Moving expenses are figured on IRS Form 3903 , Moving Expenses, and deducted as an adjustment to income on Form 1040. This makes them a particularly valuable deduction because you don't have to itemize your deductions to claim them.
For more information on deductible and nondeductible moving expenses, refer to Publication 521, Moving Expenses.