So, you’ve been offered a new job and you have to move. Here’s what you need to know if you’re going to tax Moving Expense tax deductions.
First off there a couple of tests you must pass:
You can deduct your moving expenses if you meet all three of the following requirements.
- Your move is closely related to the start of work meaning that you must have incurred the moving expenses within one year of the start of your new work.
- You move must be at least 50 further from your home than your old job was.
- You meet the time test meaning that you must move to a location and stay there for 39 weeks if you are an employee or 78 weeks if you are self-employed.
If you pass those test, here are the expenses that you can deduct on your Federal Tax return:
Deductible moving expenses are limited to –
- the cost of transportation of your household goods and family effects,
- travel costs (including lodging but not meals) of you, your spouse and your dependents while en route
- the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home. (Different storage rules apply to a foreign move.)
You cannot deduct the following items as moving expenses.
- Any part of the purchase price of your new home.
- Car tags.
- Driver’s license.
- Expenses of buying or selling a home (including closing costs, mortgage fees, and points).
- Expenses of entering into or breaking a lease.
- Home improvements to help sell your home.
- Loss on the sale of your home.
- Losses from disposing of memberships in clubs.
- Mortgage penalties.
- Pre-move househunting expenses.
- Real estate taxes.
- Refitting of carpet and draperies.
- Return trips to your former residence.
- Security deposits (including any given up due to the move).
- Storage charges except those incurred in transit and for foreign moves. “In transit” includes any 30 day period including the day of the move.
- Temporary lodging at the new residence location
If you would like to have a more in-depth understanding about tax deduction for moving you can learn more from Publication 521.