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Claim All the Proper Moving Expense Deductions You Can

Claim All the Proper Moving Expense Deductions You Can

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Daniel Cohen
UpdatedFeb 19, 2015
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    3 min read
Key Takeaways:
  • Review what is proper when deducting moving expenses.
  • Understand what kinds of deductions the IRS does not allow.
  • Use a tax professional, whenever your tax return is complicated.

Lower Your Tax Bill When you Move

Americans move frequently. Approximately 15% of Americans move in a given year.

Moving can be very expensive. Deducting some of your moving expenses is allowed by the IRS, if you moved to start a new job or to relocate to a new location. Make sure that you take advantage of claiming every legitimate deduction you are entitled to take.

Review the following tips on deducting moving expenses, so you can save money and pay less in taxes.

  • Starting Work: In general, moving expenses are deductible, if you incurred them within on year from the time that you first reported to a new location as long as the move was closely related to the time that you started your new job.
  • Distance Test: If your new job location is at least 50 miles farther from your previous home than your former job location was, then you meet the IRS' distance test.
  • Time Test: If you are a W-2 employee, then you must have full-time employment for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location. If you are self-employed, the time test requires that you work full-time for least 78 weeks during the first 24 months. If you have to file your income tax prior to fully meeting the IRS Time Test, deducting moving expenses is still allowable, as long as you intend to meet the Time Test in the following years.
  • Travel Expenses: Certain expenses tied to your travel, for both you and members of your household may be deducted, if you incurred them when you were moving from your former home to your new home. The types of expense include:
    1. Costs of lodging
    2. Transportation expenses, which include
      • airfare
      • vehicle mileage
      • costs for road tolls
      • parking fees
    A key restriction on deducting travel expenses is that you are only allowed to deduct one trip per person.
  • Personal Property: You can deduct the costs you incur to pack, crate, and transport your personal property and household goods. Costs to store your goods and insure them during transit may also be deductible.
  • Utilities: You can deduct the costs of connecting utilities at your new home and disconnecting utilities at your former home.

Nondeductible Expenses

The IRS pays close attention to returns with itemized deductions. If you claim a deduction that you were not entitled to claim, you can end up owing the IRS. Not only that, as it usually takes time for the IRS to catch your mistake, the money you have to repay will have penalties and interest added to it.

Quick tip

If you owe the IRS and your IRS tax debt is causing you problems, get a no-cost, no obligation analysis of your options from one of’s pre-screened tax specialists.

You need to be careful, when deducting moving expenses, to claim only expenses that are reasonable and directly related to your move. You can figure out the proper amount to claim for your moving expense deduction by using IRS Form 3903, Moving Expenses.

Employer-Reimbursed Expenses

It is not uncommon for an employer to pay all or part of an employees moving expenses. If your employer reimburses you for any of the cost of your move, you may have to include the amount of the reimbursement on your tax return.

Address Change

Any time you you move, it is important to update the IRS with your new address, so you receive any tax refunds or IRS letters or notices that are sent to you. You can use the IRS Form 8822, Change of Address, to notify the IRS of your address change.

Professional Assistance

If you ever are filing a complicated tax return, it is prudent to seek the advice and assistance of a tax professional. The costs of making a mistake on your tax return is likely to far exceed the cost you would pay to have your tax return professionally prepared.