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What moving expenses are tax deductible?

March 31st, 2016 - 1:02 PM

Deductible Moving Expenses

When you’re in the middle of a move, you’re probably not thinking about tax returns. But when tax time rolls around, you’re likely thinking, “Can you deduct moving expenses?” The answer is that they’re only deductible if you moved for work. Whether it’s your first job, the same job at a new location, or a completely new job, you must meet certain requirements to receive any tax deductions for moving expenses. Let’s cover some basic information about relocating and tax deductions, then explore some more in-depth questions about what may or may not be tax deductible (including special circumstances like military and PCS moves).

moving expenses and tax deductions

Does your move qualify for deductions?

Before filing your taxes, it’s important to make sure you meet the specific moving expense requirements. No one wants any surprises during the strenuous tax season.

The primary requirement is that you’ve moved due to a change in your job, business relocation or because you started a new job or business. If you’re unsure about whether or not you meet this requirement, click to view the IRS Topic 455 which explains the specifics in more detail. 

How to deduct moving expenses

If you can confirm that you’ve moved for work, you’ll then need to meet three more conditions to qualify for moving expense deductions. Based on the information from Publication 521, which is the IRS document all about deductible moving expenses, your move must:

  • be closely related to the start of work
  • meet the distance test
  • meet the time test

Closely related to the start of work

Generally speaking, you can deduct moving expenses  acquired within one year from your job’s start date as long as the move is closely related to the location and start time of the new job. If you don’t move within one year of your job’s start date, these moving expenses typically can’t be deducted. However, if you can prove specific circumstances prevented you from moving within that time, such as not moving because your child is finishing out the school year, it may be possible to receive tax deductions. Consult a professional tax advisor for more information on circumstances that could still be tax deductible.

The 50 mile distance test

To pass the distance test, your new job must be located at least 50 miles farther from your former residence than your old job was. For example, if you lived somewhere that was 10 miles away from your old job, you’d have to take a job at least 60 miles away to qualify for the deduction. If you have no previous workplace, your new job location must be at least 50 miles from your old home to deduct moving expenses. For a visual example, check out the Figure A. Illustration of Distance Test on the IRS website.

The time test

To pass this test you must work full-time for at least 39 weeks (9 months) during the first 12 months immediately following your arrival in the general area of your new job location. If you’re self-employed, you must work full-time at least 39 weeks during the first 12 months and for a total of at least 78 weeks (18 months) during the first 24 months after you arrive in the general area of your new job location (also known as the 78-week test).

Keep in mind that the required length of time you must work to qualify for deductions do not have to be worked consecutively, or even for the same employer. If you don’t meet the time test within the 12 month period (or 24 month period for self-employers) you’ll have to reverse the deduction in one of two ways: by including the original deduction amount under “other income” on the next year’s tax return; or by filing an amended tax return without the moving expense deduction. 

Also, note that married couples filing jointly only need to have one spouse who passes the time and distance tests to qualify for the moving expenses tax deduction.

Exceptions regarding the time test include death, disability, or involuntary separation.

If you have questions about whether you meet these requirements so far, we recommend contacting a tax professional or the IRS for assistance.

What if I moved for the military? Are my military moving expenses deductible?

If you're a member of the US military, and your move was due to a military order or a Permanent Change of Station (PCS), your expenses are deductible. As a member of the military doing a PCS, you’re not required to fulfill the time or distance tests to deduct moving expenses. Click to view the ‘Member of the Armed Forces’ section in Publication 521 to get specific information from the IRS about PCS tax deductions.

Moving expenses that are tax deductible

One of the most common questions we hear is “are moving supplies tax deductible?” The answer is yes, you can deduct supplies like moving boxes and packing tape —

and there are many other things you can write off, too.

According to the IRS Publication 521, moving expense deductibles include:

Travel by car:taxpayers always have the option of calculating the actual costs of gas and oil if you keep an accurate record for each expense, or you can deduct these expenses based on the standard mileage rate of 23 cents per mile for the year 2015 or 19 cents per mile for the year 2016. You may also deduct parking fees and tolls you paid.

Packing and moving: this includes the cost of packing, crating, and transporting your items to your new home as well as fees paid to hire professional packers and movers (this is where the moving supplies come in!).

  • The cost of connecting and disconnecting utilitie
  • The cost of shipping your car
  • The cost of shipping your household pets
  • Lodging expenses (including the day you arrive)
  • In-transit storage and insurance: tax deductibles can include the cost of renting storage units for up to 30 days after your things are moved from your former home if you’re unable to move into your new home immediately.
  • The cost of moving your things from a place other than your primary residence
  • Airline and train tickets: if you’re moving long distance, you can deduct these travel costs.

According to the IRS, you can only deduct expenses for one trip per person; however, you don’t have to travel together or at the same time. If you make multiple trips back and forth for the same move, you can only deduct one of those trips; but if you and your spouse drive separately you can deduct both moving expenses.

Keep in mind you can only deduct expenses that are reasonable for the circumstances of your move. You should take the shortest, most direct route available to your new home. Taking the scenic route or a detour for sightseeing during your move is nondeductible.

What if I moved out of the country? Can I deduct my moving expenses?

Tax deductions on moves outside of the United States are possible, but special rules and regulations do apply. Check out IRS Publication 54 for details on foreign moves.

How to determine your IRS moving expenses

To figure all the costs from your move, keep accurate records of your expenses (receipts, statements, bills, mileage logs, Bill of Lading, etc.) and use Moving Expenses Form 3903 to calculate your total cost.

If you moved with U-Pack in the last year, you can get a copy of your Bill of Lading and Delivery Receipt online. You’ll just need your tracking number and your U-Pack reference number.

What’s not tax deductible when moving?

It’s important to note the following things cannot be deducted (check with the IRS for any additional items that cannot be applied):

  • Food expenses/meals
  • Furniture you purchase in-route to your new home
  • Car tags
  • General vehicle maintenance
  • Car insurance
  • Depreciation of your car
  • Any part of the purchase price of your new home
  • Security deposits
  • Driver’s license
  • Expenses of buying or selling your home
  • Expenses you’ve acquired from signing or breaking a lease
  • Home improvements to help sell your home
  • Loss on the sale of your house
  • Cancellation fees or investment loss due to early termination of club/organization memberships
  • Mortgage penalties
  • Real estate taxes
  • Pre-move house hunting expenses
  • Remodeling of your new home
  • Refitting of carpet and draperies
  • Return trips to your former home
  • Storage charges (outside of the 30-day period as stated above)
  • Tips you give the movers
  • Temporary living expenses

Special circumstances

We understand everyone’s circumstances are different. Here are some situations where moving cost tax deductions may not apply:

  • If you’re moving due to a divorce, you can’t deduct moving expenses; however, you may want to talk to your attorney to see who is responsible for moving costs due to the divorce.
     
  • If your employer is paying for your move, your move isn’t tax deductible. If you pay for the move and your employer reimburses you, you must actually claim that money as income on that year’s tax return.
     
  • If you're moving because of illness, you can’t deduct moving expenses on your tax return. You may want to see if your health insurance provider includes relocation coverage in your policy.
     
  • If you’re moving to attend college, you can’t deduct moving expenses on your tax return, but you may be able to deduct interest you pay on a qualified student loan.

When are income taxes due?

Your Federal Tax Return is due by April 15, but each state has different income tax due dates. Check with your state to make sure you're getting your paperwork completed in time.

Do you have other questions about moving expense deductions?

For specific tax-related questions, we recommend calling your tax advisor or the IRS at 1-800-829-1040 (for individuals). You can also visit or call your local IRS office.

If you have any questions about moving or want to get a moving quote from U-Pack, leave a comment below or call 800-413-4799. We’d love to help you move long distance for an affordable price.

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