ARE MY MOVING EXPENSES TAX DEDUCTIBLE?

 

The following information is supplied for your benefit and is intended to be used as a starting point only. Please consult a qualified accountant or tax preparer to ensure that your taxes are prepared with the most current guidelines and allowable deductions. Thank you!

 

     Depending upon the circumstances of your move, you may be eligible to deduct some of your moving expenses on your federal income tax return when you complete the appropriate forms. This information sheet is designed to assist those individuals who qualify to benefit from all the allowable moving-related deductions.

 

     We recommend that you contact the nearest Internal Revenue Service office for the most current information, as well as in regard to any specific questions you may have about determining the eligibility of your expenses for the deduction program. You may also take that opportunity to pick up the necessary IRS forms and publications.

 

Do You Qualify?

 

     Did you move due to a change in the location of your employer (either as a result of a transfer by your current employer or your acceptance of a new job)? If yes, then you may be able to deduct, as an adjustment to gross income, reasonable moving expenses if the following conditions are met:

 

1). Did the job location change require you to commute at least 50 miles (one way) farther to work than if you had not moved?

 

NOTE: This deduction is available to anyone, including college students, going to work for the first time or returning to work after a substantial absence. The job must be at least 50 miles from the former main home. To determine if you meet the distance requirement, your main home would be with your parents or guardians if they claim you as a dependent on their income tax return. If you file your taxes as an independent, your main home would be your residence before moving. A home may include a house, apartment, condominium, mobile home, or houseboat. Seasonal homes are excluded.

 

2). Did the move occur within one year of the date you began to work at the new location?

 

3). Did you work full time (for any employer) in the general vicinity of the new location for at least 39 weeks during the 12-month period following the move?

 

NOTE: If you are transferred, laid off, or become disabled, before the end of the 39-week period, you may still claim moving expenses. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and a total of at least 78 weeks during the 24 months immediately after you move.

 

NOTE: Special rules may apply to members of the armed forces, retirees and survivors of deceased family members who lived outside the United States. Consult the IRS for details.

 

Deductible Expenses:

 

     The following deductions may apply if you moved within the United States or from a foreign country into US territory and you meet the qualifications listed above.

 

Household Goods

 

     The cost of packing, crating, and transporting your family’s personal effects from your former place of residence to your new one is deductible. Transporting your automobile and pets, and the cost of valuation and in-transit storage can be included in your moving expenses, as well. The deduction of in-transit storage expenses is limited to the cost of 30 consecutive days of storage after your goods are picked up.

 

Travel

 

     You can deduct the cost of your personal, one-way transportation and lodging. The trip should be the shortest, most direct route available for the type of transportation selected. Family members do not need to travel together.

 

In General

 

     If you are self-employed, and you have already made specific arrangements to operate your business at a new location you may deduct the above expenses. There is no cap on the maximum deduction allowed for transporting household goods or for a family’s travel costs en route to the destination.

 

Non-Deductible Expenses

  • Following is a list of items that are non-deductible moving expenses: House-hunting trips prior to the move
  • Temporary housing used prior to the permanent move
  • Meals purchased while moving from the old residence to the new residence
  • Deposits lost due to damage or insufficient cleaning
  • Deposits required at the start of a new lease
  • Costs incurred as a result of selling, buying or leasing homes as a result of the move
  • Improvements made to home
  • Licenses for automobiles or drivers
  • Any lost club membership dues
  • Any loss on the sale of the home
  • Any mortgage penalties
  • Real-estate taxes (these should be listed as an itemized deduction on Schedule A, and not as a moving expense)
  • The costs of having carpets and draperies refitted

 

How are moving expenses reported?

 

      You may only deduct moving expenses as an adjustment to gross income. You will need to support your claim for deductions. Use IRS Form 3903, which will show the type and the amount of moving expenses you incurred.

 

     Any deductible reimbursements that you receive as a result of your move will not be included in your gross income for the year that they were paid to you. If the expenses are not deductible, they will be included in your income. You will need a detailed breakdown from your employer of any and all payments for moving expenses that they reimbursed you for. 

 

     Claim your deductible expenses “above the line” if you are not reimbursed by your employer or you are self-employed. This means that, rather than itemizing deductions as in the past, you will take the deduction on page 1 of Form 1040.

 

     Many people will elect to use their own automobile to transport their household goods and/or their families to the new location. The costs of doing this may be deductible. You can calculate the costs of operating your vehicle for moving purposes in two ways:

  • Keep a record of all out-of-pocket expenses for gas and oil that also lists dates of travel and odometer readings; or,
  • Verify the miles traveled with a list of dates and odometer readings and deduct 10 cents per mile.
  • Any parking fees or tolls should be added to your travel and lodging costs.

 

General Information

 

     Remember to ask for and to keep dated receipts of all of your moving expenses as documentation and support when preparing your income tax form.

 

     If you have not met the 39-week residency requirement but have paid for your moving expenses by the time your tax returns are due, you can choose one of the two following options:

  • If you expect to meet the residency requirement, you can take the deduction now.
  • Or, you can omit the deduction at that time. Wait until you fulfill the residency requirement and then file an amended tax return (Form 1040X).

     Keep all papers pertaining to your move, including any that your mover might give you. For example, you will need to keep the Bill of Lading and the Additional Services Performed form, if used. These will be necessary when you claim your tax deductions.

 

     Consulting an accountant about how your moving expenses could affect your income taxes is a good idea. If you have been reimbursed for your non-deductible moving expenses by your company, this might increase your tax liability. Altering your W-4 now to have more money withheld might help offset any extra tax liability.

 

     Request Publication 523 and Schedule D from the IRS to help you file tax information on the sale of your home. Request the IRS Publication 521 and Form 3903 for more information on filing moving expenses.

 

How can I get the tax forms and publications I need?

  • Call your nearest IRS office or the IRS Federal Tax Forms Service at (800) 829-3676.
  • Print them off from the IRS Website at www.irs.gov
  • Try your local bank, library, post office, or other local government offices. They often have some of the forms you’ll need to use for filing federal tax returns.

 

CHECKLIST: MOVING EXPENSES

  • Keep records pertaining to your move in one place, and retain them for 3 years, including:
    • Mover’s Bill of Lading
    • Mover’s Inventory
    • Mover’s Additional Services Performed
    • Travel Expense Receipts: personal transportation costs (air, bus or train fares, and/or automobile expenses)
    • Travel Expense Receipts: Lodging

 

NOTES ABOUT EXPENSES:

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IRS TAX FORMS AND INFORMATION

  • W-2 Wage and Tax Statement (supplied by employer)
  • 4782 Employee Moving Expense Information (supplied by employer)
  • 1040 US Individual Income Tax Return
  • Schedule A – Itemized Deductions
  • Schedule D – Capital Gains and Losses
  • Form 3903 – Moving Expenses
  • Publication 521 – Moving Expenses
  • Publication 523 – Tax Information on Selling Your Home
  • Publication 530 – Tax Information for Homeowners
  • Publication 553 – Highlights of Tax Changes

 

HOW CAN I ORDER THESE FORMS?

 

- Call your nearest IRS Office or (800) 829-3676.

 

- Call with questions at the local IRS Office, or the national IRS office at (800) 829-1040.

 

**IRS Publication 553 (Highlights of Tax Changes) is available annually in January. Make sure to check this publication before filing.

 

*** Members of the armed forces or civilians moving outside of the United States should contact their tax adviser for specific information about qualifying for and claming moving expenses.