Relocating for work? You may be able to deduct some — or all — of your moving expenses. With the deadline to file your income taxes steadily approaching, you’ll need to get a move on it! Here’s what you need to know about claiming your moving costs as a deduction on your federal income tax return.
Requirements for Deducting Moving Expenses
For moving costs to qualify as tax-deductible expenses, they must meet three criteria:
- They must be directly related to the start of employment
- They must pass the distance test
- They must meet the time test
Below, we’ll take a closer look at each requirement.
Moving for work
In order for your moving expenses to be deductible, they must be directly correlated to the location of your new job and when you were hired. Generally, you need to move within one year of starting your new employment to deduct the cost of moving.
Distance test requirements
The distance between your former home and your new place of employment must be at least 50 miles farther than the distance between your former home and your previous employer. When calculating the distance, you must use the shortest possible routes between the locations.
Time test requirements
You must be employed on a full-time basis for at least 39 weeks in the 12-month period following your move. The 39 weeks do not need to be consecutive, however, and they can include work at more than one place of employment.
Deductible moving expenses are defined as the reasonable expenses that are incurred during the transport of your personal belongings from one home to another. These expenses include the cost of moving not just yourself, but for every member of your household. The only caveat is that you can only deduct expenses for one trip per member of your household. Among the common deductible moving expenses:
- Professional moving services – The IRS allows you to deduct the full cost of hiring professional movers.
- Do-it-yourself moving trucks or pods – The full cost of renting a moving pod or moving truck can be deducted when filing taxes.
- Gas and oil, or standard mileage rate – If you’re traveling in a car you own, you can deduct your travel expenses — including gasoline, oil, highway tolls, and parking fees. Alternatively, you can use the annual standard mileage rate to calculate the estimated cost of your move.
- Packing supplies and equipment – Any boxes, crates, packing tape, or moving equipment that you’ve purchased or rented are deductible moving expenses.
- Storage units – You may deduct the cost of a storage unit rental for up to 30 days. This can help ease the stress and expense of finding a place to store your belongings if you need to leave your former home but can’t yet move into your new one.
- Moving insurance – Moving insurance covers your personal belongings in case of loss or damage.
- Travel expenses – If you’re moving long distance, the cost of your airline or train fare can be deducted. You may not, however, deduct the cost of meals.
How to Deduct Moving Expenses
To claim a tax deduction for moving costs, you must report all your expenses on IRS Form 3903 and include it with the tax return covering the same year of your move. While the time test means that many taxpayers technically cannot satisfy the requirements for deducting moving expenses until the following tax year, the IRS will allow you to deduct moving costs in the same year you relocate.