Is Your Move Tax-Deductible?

Could Uncle Sam help pay for your move? If you relocated because of your job or you changed jobs–which, in this economy, is becoming more common–then you may be eligible for an income tax deduction for your moving expenses, such as:

• The cost of packing and shipping your possessions, including insurance and up to 30 days of storage.
• The cost of traveling to your new home (once), including lodging but not meals.
• The cost of disconnecting utilities at your old home and hookups at the new home.

You can deduct these expenses whether you itemize deductions or take the standard deduction. The deduction is computed on IRS Form 3903. The allowable moving expenses are then listed as an adjustment to income on Line 26 of Form 1040. How do you know if your move makes you eligible for the deduction? There are two main factors: time and distance.

1. Time: Your move must have occurred within one year of you starting your job at the new location. Once you arrive in the new location, you must have worked full-time for 39 weeks during the first 12 months since your move. The worked weeks don’t have to be consecutive or even with the same employer. If you moved for work at the end of the year, then you may choose to either amend your tax return or in the following year’s return show the moving expenses you deducted as other income on Line 21 of form 1040.

2. Distance: If the location of your new job is at least 50 miles farther from your previous residence than your last office was, then you have met the distance test. This means that you have made a significant move, and not simply relocated to make your commute easier. You can also meet this requirement if you had to move to your new home as a condition of your employment, or you will spend less time or money commuting from your new home to your new job. If this is your first job or if you are returning to work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home.

Keep an accurate record of your moving expenses, including receipts, bills, cancelled checks, credit card statements and mileage logs in case you are audited.