If you relocated for a job in 2011, your moving expenses may be tax deductible. This deduction is an adjustment of your income, so you don’t want to miss taking it if you are eligible.
According to the IRS, “reasonable moving expenses” may be deducted if two tests are met:
1. The Distance Test
To pass this test, your new place of work must be at least 50 miles farther from your previous home than your former workplace was from that same residence. Therefore, if you lived 15 miles from your last job location and your new place of work is at least 65 miles away from the home you moved out of, you pass the distance test. If you didn’t have a previous workplace, your new job location must be at least 50 miles from the home you moved out of to pass the IRS distance test.
2. The Time Test
To meet the time test if you are an employee relocating for a job you must work full time for at least 39 weeks during the first 12 months after arriving in the area of your new workplace. If you are self employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately after arriving in the area of your new workplace. There are exceptions to the time test, such as death, disability and involuntary separation.
Members of the armed forces relocating due to a military order and permanent change of station do not have to meet the distance or time tests to be eligible for the moving expenses tax deduction.
When relocating for a job, eligible moving expenses may be deducted off the top as an adjustment to your income. You are not required to itemize to take the deduction, but you will need to use Form 3903 to figure the amount that can be deducted on your Form 1040.
What Moving Expenses Can Be Deducted
If you meet the deduction requirements, you can deduct reasonable costs for moving your household goods and personal effects as well as your cost for traveling to the new home, including lodging. Cost of meals during travel is not deductible.
What the IRS Considers Reasonable Moving Expenses
For your expenses to be considered reasonable you must take the shortest, most direct route to the new location. That means if you make a detour for personal reasons, such as site-seeing along the way, the additional cost for doing so would not be eligible for deduction.
Expenses the IRS allows include costs for:
- hiring a full service mover to provide employee relocation services including packing, crating and relocating your items to your new home
- storage and insurance of household and personal items within a consecutive 30-day period after moving items from your old home, but before delivering them to your new home
- disconnecting or reconnecting utilities due to the move
- shipping your automobile
- transporting your household pets to your new location
You may deduct moving expenses for all members of the family, even if they do not travel together at the same time.
See details, including more information about what expenses can and cannot be deducted, in IRS Publication 521.
