tax tips — August 17, 2011

Moving On? Here's Proof You CAN Take It With You...

by Bob Williams

deducting moving expensesWith the job market about as changeable as the stock market these days, it certainly pays to be flexible with your career. Time was when an employer would foot at least part of the cost to get a new employee all moved in. And while those days may be gone, you still don't have to bear the full cost of the moving bill. If you meet a few simple requirements, you can take at least some of the costs of moving off your next tax return.

For example, take a look at just when you'll be moving to your new position. Generally, if your move is within a year of the start of your job, you can use your moving expenses to figure your deduction.

How far you're moving is another factor to consider. Your move meets the distance test if your new job's location is at least 50 miles farther from your former home than your previous job site was.

And whether you're working full- or part-time is also important. The IRS says you have to work full-time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location. If you're self-employed, that number is at least 78 weeks during the first 24 months of self-employment at the new location. If your taxes are due before you've satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.

If you and your family needed more than a day to drive to your new hometown, you can consider deducting the lodging expenses for everyone while moving. You also can deduct transportation expenses: airfare, vehicle mileage, parking fees and tolls incurred during the move. But choose wisely: you can only deduct one trip per person.

In any move, everyone knows that the job of packing, crating and transporting household possessions can be a real pain. Believe it or not, so does the IRS. That's why the cost of all that is deductible. If you had to store your goods in the course of the move, you can deduct the cost of that as well, up to 30-days' worth, anyway. And the money you paid to have your utilities turned off at your old house, and turned on at the new one, can also be deducted from your taxes. Just remember to keep all your receipts.

There is a very broad-based test the IRS uses to judge whether moving expenses are deductible. You can deduct only those expenses that are reasonable for the circumstances of your move. If you move to Florida, for example, don't expect to deduct the cost of that deep-sea fishing trip you took the first week you were there. You won't be getting any money back from that one.

Other expenses that are not allowed: any part of the purchase price of your new home, car license tags, a new driver's license, the cost of buying your new home or selling your old one, any lease costs or security deposits.

And if your employer did reimburse you for the cost of the move, that reimbursement money may have to be included on your tax return.

To figure out how much you might be able to get back in your move, download Form 3903, Moving Expenses, from the IRS website, www.irs.gov.

And one more thing before you head out the door for the last time: Don't forget to update your address with the IRS and the Postal Service. You can use Form 8822 to notify the IRS. After all, you don't want all those deductions to get lost in the mail …

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