So you got that exciting job offer across the country or maybe you finally got employed again after having been laid off in the recent years’ recession. If you’re moving due to change in employment, starting your first job out of school, or getting back into the work force after having been laid off, your moving expenses may be deductible on your tax return.
For your expenses to be deductible you have to meet the time and distance tests:
Distance test - To be able to deduct your moving expenses you have to move at least 50 miles from your former job location so your commute will be at least 50 miles farther from your former home. If you’re starting your first job out of college the distance test would be 50 miles from your former home. Likewise, if you’ve been unemployed for a substantial amount of time (time period of unemployment is not specified in the regulations) the distance test is 50 miles from your former home.
Time test - To be able to deduct your moving expenses you must work full-time at least 39 weeks in the first 12 months at the new location. If you’re self-employed, in addition to the requirement of 39 weeks of full-time work in the first year, there’s a total of 78 weeks of full-time work required in the first 24-month period following the move. You still take the deduction in the year of the move even if the time test hasn’t been met yet.
What type of expenses are deductible and nondeductible?
Deductible expenses - Expenses you incur traveling from your old home to the new. These expenses include lodging paid on the way to the new location, automobile expenses (mileage can be taken in place of actual auto expenses), insurance, packing, and transportation of your personal belongings.
Nondeductible expenses - Meals, house hunting expenses, temporary lodging in the new location, and any expenses incurred buying or selling your home are not deductible as moving expenses.
Deductible moving expenses are reported as an “adjustment to income” on the tax return, so you can take the write-off even if you don’t itemize your deductions.
Some employers will graciously give you a moving allowance or refund your moving expenses. These reimbursements from your employer may or may not be reported on your W-2. To ensure accurate reporting, please consult a CPA.
Safe travels and best wishes for you in your new job!
Allen & Company, PC - a CPA firm serving Kennesaw, Marietta, Acworth, Woodstock and north Atlanta. Providing accounting, financial statement audit, taxation, and advisory services for individuals and businesses. Extensive experience working with franchises.