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Moving? Pass These 3 Tests to Bring the Deductions With You!
December 3, 2016
Whether it’s your first job, new job, or the same job, relocating for work isn’t just a major move, it may also be an opportunity for some major tax deductions. While Uncle Sam won’t help you pack boxes, he may help relieve some of the costs associated with moving expenses.
There are three tests a move must pass to receive a tax deduction from the Internal Revenue Service:
The Job Test Just because you’ve always wanted to make a cross-country road trip and California seems like a cool place to live, doesn’t mean you can do so on Uncle Sam’s dime. The IRS will only let you take a deduction for moving expenses if you are moving because of a job. It doesn’t matter if it’s your first job out of college, a relocation for the same job you’ve had for years, or a brand new job somewhere new – all that matter is that you start working shortly after the move.
The Distance Test Next, you must pass the distance test. Just moving across town to shorten your commute? Sorry – you’re out of luck. Moving out to the suburbs, though? You may qualify. The magic number here is 50 miles. Your new job and your previous home must be at least 50 miles away further away than your previous employer was from that home. Also, note that the IRS will only accept the shortest commutable route between the two locations.
The Time Test Once you have moved, unpacked your boxes, settled into your home, and begin work at your new job, you must work full-time for at least 39 weeks (just shy of 10 months) within the initial 12-month period from the day you arrive. This is how the IRS makes sure you actually move for a job and not just for fun. They don’t require a set number of days or hours each week, and the weeks don’t have to be consecutive or with the same employer the whole time. If for some reason, you get laid off or transferred again, they’ll waive the time test for you.
Now that you’ve passed all the tests, what can you claim? The IRS will cover “reasonable” expenses related to transportation and household items. These can include:
Renting a storage unit for up to 30 days.
Travel costs for you and other family members.
Cost of oil, gasoline, parking fees, and highway tolls if you drive.
Cost of airline and train tickets for long-distance moves.
Report all expenses on IRS Form 3903 and attach it to the tax return for the year that you moved to claim all of your deductions.