Deducting Moving Costs

If you’re moving, and it’s related to starting a new job, you may be able to deduct the costs of moving on your tax return using Form 3903, Moving Expenses. There are three tests you must meet in order to be able to deduct moving expenses:

Move related to start of work: moving expenses must generally be incurred within one year from the date you moved. You do not have to have a job set up before you move.

Distance test: your new main job location must be at least 50 miles farther from your former home than your old main job location was from your former home. For example, if your old main job location was 15 miles from your former home, your new main job location must be at least 65 miles from that former home.

Time test: you must meet either the time test for employees or the time test for self-employed individuals. The test for employees is that you must work full time for at least 39 weeks during the first 12 months after you arrive in your new job location. Self-employed individuals must work full time for at least 39 weeks during the first 112 months and a total of at least 78 weeks during the first 24 months.

If you meet the three tests mentioned above, you can deduct the following reasonable moving expenses:

Moving your household goods and personal effects. This includes the cost of packing and transporting your household goods and personal effects. You may also be able to deduct the costs of storing and insuring your items while in transit.

Traveling to your new home, including lodging but not meals. This includes airfare, vehicle mileage, parking fees and tolls, and transportation expenses.

• You can deduct the costs associated with connecting or disconnecting utilities.

• If your employer reimburses you for the cost of the move, you have to include the reimbursement on your income tax return. The following expenses cannot be deducted as moving expenses:

• Any part of the purchase price of your new home, expenses of buying or selling a home, or mortgage penalties.

• Car tags, driver’s license, or real estate taxes.

• Home improvements to help you sell your home, refitting of carpet and draperies, and expenses of entering into or breaking a lease.

• Pre-move house-hunting expenses, return trips to your former residence, and security deposits.

If you have questions on this subject please contact Bell and Company for more information. 501.753.9700