Deducting Relocation Expenses

The only other activity people probably find more loathing than filing taxes is moving from one place to another. Though it may vary individually, packing your entire home, lifting boxes and furniture, and then the unpacking isn’t quite thrilling.

But moving and filing taxes are a bit more related to each other than you think – especially if you’re relocating for employment. You can deduct your moving costs which can lower your tax liabilities. The IRS has a few guidelines for writing off expenses for moving.

Start of Employment
The best situation is to have a job already set up at your new location before leaving, but sometimes it isn’t quite that simple. The IRS allows up to a year from the time you moved to the time you start working to claim moving deductions. If it takes you over a year after relocating to secure employment, then it may be too late to report any moving costs.

Location of Job
You need the pass the IRS distance test to qualify for moving deductions. The distance from your old home to your new job has to be 50 miles more than the length from your old home to your previous job. So if you typically drove 10 miles from your old home to your old job, your new job needs to be at least 60 miles away from your old home.

Time Limit
There is also a time test for qualification. As stated earlier, you only have a year after moving to find employment. But within that year, you need to have worked full-time for at least 39 weeks at your new job – that’s nearly 10 months. If your tax return happens to be due sooner than the time test, you could still deduct based your expectancy to pass this requirement.

Important: You need to follow all three guidelines to deduct your relocation expenses. Check with a local tax professional to make sure you qualify. Eligible deductions include traveling and lodging costs during your move, the cost of shipping, storage, or insurance of property, costs for the connect/disconnect of utilities and more.

There are moving expenses that are non-deductible such as the cost of selling or buying a home or terminating or entering a lease. Because these write-offs depend on having a job, any expenses reimbursed by your employer are also non-deductible. If your move takes you across state lines, don’t forget to file the required state returns.

Get more time to have all your deductions in order by e-filing a personal tax extension with ExpressExtension.com. In minutes, you can transmit IRS Form 4868 and get approved for a 6-month extension to file your income tax return – conveniently e-file from your iOS or Android handset with our FREE downloadable app.

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