Among the many tax topics, many people do not realize that
if they are moving to start a new job or transferring with a current employer,
their moving expenses may be deductible on their federal income taxes.
Moving expenses are considered an
“above-the-line” deduction meaning that they reduce your adjusted gross income
on which taxes are based and can even be claimed if you do not itemize
deductions.
To qualify for the deduction, you must meet the following
criteria:
A. Your move relates to the “Start of work.”
B. Your move meets the “Distance Test.”
C. Your move meets the “Time Test.”
Now let’s clarify these “ABCs…”
A. Your move must “connect” in both place and time
to the start of work at your new location. If you do not move within 1 year of
the date you begin work, you ordinarily cannot deduct the expenses unless you
can show that circumstances existed that prevented the move within that time.
B. Distance Test – Your new workplace must be at
least 50 miles farther from your old home than your old job location was from
your old home. For example: If your drive to work was 15 miles at the previous
location, your new job location must be 65 miles or more from your old house.
When calculating distance, which route do you consider? The route to consider is the shortest of the
more commonly traveled routes between your old home and the new job location.
If there was no previous work
place, your new job must be at least 50 miles from your old home.
C. Time Test – At the new work place, you, as the
new employee, must work fulltime for at least 39 weeks during the first twelve
months immediately upon your move and for a total of at least 78 weeks during
the first twenty-four months immediately following your arrival in the general
area of a new work location.
There are exceptions to the time
test (including death, disability, involuntary separation, etc.) These can be found in IRS Publication 521.
Please note that Members of the Armed Forces who move
because of military orders and permanent change of station, do NOT need to meet
the distance and time tests.
Remember that moving costs must be “reasonable and
necessary.” Do your research online via the IRS website and other tax
information sources. It may help lower your tax bill!
All of this being said, whenever you move, please give us a
call at Superior Relocation Services.
You have questions and plans, we have answers and moving expertise. We’re here for you and ready to
professionally streamline your next move.
