Tax Deductible Moving Expenses

In some cases, such as moving in order to start a new job or being transferred in your current job, the IRS allows you to deduct some moving expenses on your federal income tax return if certain conditions are met:

• The new commute to work is at least 50 miles longer, based on the shortest, most commonly traveled routes.
• You begin work at the new location within one year of the move.
• You work full time in the new location for at least 39 weeks during the 12-month period following the move. You may still claim moving expenses if you are transferred, laid-off or become disabled before the end of the 39-week period.
• If you are self-employed, you must work full time for at least 78 weeks during the 24 months immediately after you move.

Special rules may apply to members of the armed forces, retirees and survivors of deceased family members who lived outside the United States. Consult the IRS for details.

Tax Deductible Expenses

If you meet the qualifications, the following types of expenses may be deductible if you moved within the United States or from a foreign country into U.S. territory.

Packing and Transporting

You can deduct all reasonable packing, crating and transporting expenses. These may include the transportation of your automobile and pets and the cost of valuation and in-transit storage. For moves within the United States, the deduction of in-transit storage expenses is limited to the cost of 30 days of storage after your goods are picked up.

Travel

You can deduct the cost of your personal, one-way transportation and lodging. The trip should be the shortest, most direct route available for the type of transportation selected. You may only deduct the expenses for one trip per family member, but it is not necessary that all members travel at the same time.

Home Business

If you are self-employed, you may deduct the aforementioned expenses if you have already made specific arrangements to operate your business at a new location.

There is no cap on the maximum deduction allowed for transporting household goods or for a family’s travel costs to the new home.

Non-Deductible Expenses

How Are Moving Expenses Reported?

Moving expenses are deductible only as an adjustment to gross income. Generally, to support your claim for deductions, you should use Internal Revenue Service Form 3903 — “Moving Expenses” — which shows the type and amount of moving expenses incurred. However, there are circumstances where other forms should be used, so remember to consult the IRS or your tax advisor to make sure that you are using the correct forms.

Reimbursement

If you receive reimbursement for move-related expenses, that reimbursement is likely to have tax implications. Be sure to discuss those implications with your employer and your tax advisor. Your employer should provide you with information about the method of reimbursement used and what records you are required to have relating to reimbursement.

Talk to Your Accountant

Because Chipman cannot legally offer tax advice, you should always consult the IRS or your personal tax advisor for the most current information about your particular situation.

• Ask for and keep dated receipts of all of your moving expenses and documentation. Keep all papers pertaining to your move that you received from the moving company, such as the Bill of Landing and Additional Serviced Performed form, if any. You will need them when you claim your tax deductions.
• Consult an accountant about how moving expenses could affect your income taxes. If a company reimbursed your non-deductible moving expenses, this could increase your tax liability.
• To help you file tax information on the sale of a home, request Publication 523 and Schedule D from the IRS. For more information on filing moving expenses request Publication 521 and Form 3903 from the IRS.
• To order federal tax forms and publications, call the nearest IRS office or 800-829-3676. Some of these forms and publications may also be available on the IRS Web site: www.irs.gov. You may also direct your questions to the local IRS office or the national office at 800-829-1040.
• IRS Publication 553, “Highlights of Tax Changes,” is available in January of each year. We recommend that you obtain a copy of this publication to determine if changes have been made in allowable moving expense deductions.

If you are a member of the armed forces or a civilian moving outside the United States, contact your tax adviser for specific information on qualifying for and claiming moving expenses.