The word “taxes” is one that most people prefer to avoid. Combine it with “moving” and you’re way up there on the Stress-O-Meter. But there’s good news. Under certain circumstances, many of your moving expenses can be deducted from your taxes. So if you carefully track and organize the required moving-related paperwork for the IRS, you’ll be able to take advantage of moving tax deductions.
If you normally fill out the standard 1040EZ tax form, you’ll need to file a different form if you itemize your deductions. You’ll probably be able to complete it yourself, but if you have questions, ask your accountant. Below is the information you’ll need to get started.
Eligibility for moving tax deductions
If you moved within the last tax year, the IRS will allow you to deduct specific moving expenses. The IRS tax topic 455 explains how the deductions work. There are several other situations in which you may be able to deduct your moving costs. But if your move is to start a new job, you may qualify if you meet this criteria:
- The Distance Test: Your new job has to be at least 50 miles from your old home and job location. If you didn’t work before the move, your new job location must be at least 50 miles from your old home. But your new home must also be closer than 50 miles to your new workplace location.
- The Time Test: You must be starting the new job within one year of your move. If there are circumstances that you can show caused a delay, such as cases of death, disability, involuntary separation or similar situations, you may be exempt from the Time Test.
- You must work full-time for at least 39 weeks during the first 12 months following your move.
- If you’re self-employed, you must have worked at least 78 weeks over the previous two years to qualify.
Keep good records
Save those receipts! According to the IRS, moving expenses are figured on Form 3903. For more information on deductible and non-deductible moving expenses, refer to the IRS Publication 521.
By Nancy LaFever. Visit our friends at MyMove.com for tips, customizable checklists and hand-picked deals to make your move more rewarding and less stressful.