Moving & Tax Deductions

Some, but not all, moving expenses can be allowable tax deductions.

The IRS allows deductions for some of the costs associated with a move to accommodate a job in a new location. However, there are two tests which must be met in order to qualify for deductions.

1 - Distance Test

To qualify for a deduction, your new workplace must meet a 50 mile test. The distance between the old home and old work minus the distance between the old home and the new work must be more than 50 miles. For example, if the commute to the old workplace was 8 miles, a commute from the previous home to the new workplace must be at least 58 miles. If the person did not have a job before moving, then the new job must be at more than 50 miles from the previous home.

2 - Time Test

A person must work full time in the local area of the new workplace for at least 39 weeks during the 12 months right after the move. There are exceptions to this and other rules apply for those that are self-employed. If you are not sure if you meet the requirements to deduct your moving expenses it is best to check with a tax advisor or visit the IRS website, Publication 521, and Form 3903 for more details.

If you pass both tests, then some expenses may be deductible:

• Costs for packing, crating and moving of your household goods
• Up to 30 days of storage and insurance for those household goods
• Transportation and lodging (but not meals) while traveling to your new location

If you make a move in 2009, check with a tax advisor before deducting your expenses to make sure you take the right deductions. According to Forbes magazine, one of the top reasons for IRS tax audits is claiming too much for itemized deductions, including deduction of moving expenses.

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