Summer is a popular time to move, whether it is so the kids do not have to change schools mid-school-year, to avoid having to move in bad weather, or simply because it can be an easier time to sell a home. Unfortunately, moving can be expensive. The good news is you might be eligible for a federal tax deduction for your moving costs.
Pass the tests
The first requirement is that the move be work-related. You do not have to be an employee; the self-employed also can be eligible for the moving expense deduction.
The second is a distance test. The new main job location must be at least 50 miles farther from your former home than your former main job location was from that home. Therefore, a work-related move from city to suburb or from town to neighboring town probably will not qualify, even if not moving would increase your commute significantly.
Finally, there is a time test. You must work full time at the new job location for at least 39 weeks during the first year. If you are self-employed, you must meet that test plus work full time for at least 78 weeks during the first 24 months at the new job location. (Certain limited exceptions apply).
What is deductible
So which expenses can be written off? Generally, you can deduct transportation and lodging expenses for yourself and household members while moving.
In addition, you can likely deduct the cost of packing and transporting your household goods and other personal property, and you may be able to deduct the expense of storing and insuring these items while in transit. Costs related to connecting or disconnecting utilities are usually deductible, too.
Do not expect to write off everything, however. Meal costs during move-related travel are not deductible. Nor is any part of the purchase price of a new home or expenses incurred selling your old one. In addition, if your employer later reimburses you for any of the moving costs you have deducted, you may have to include the reimbursement as income on your tax return.
Questions about whether your moving expenses are deductible or what you can deduct? Contact us.