Relocated for work? Consider deducting moving expenses

Monday, March 14th, 2011 By

A man carrying moving boxers down a flight of stairs.

Moving is tough. Deducting moving expenses on your taxes doesn't have to be. (Photo Credit: CC BY-SA/Claude Boucher/Wikipedia)

If you relocated for business purposes last year and are looking for a healthy tax deduction to tip the IRS scales in your favor, consider deducting moving expenses. Provided you’ve saved your receipts, it’s a great way to recoup the costs of such things as the moving van, packing materials, gasoline, lodging and more. Unfortunately, meals and sightseeing don’t count.

Take the moving expenses litmus test

Moving expenses can be tax deductions, provided they meet the following three criteria:

  1. Relocation must quickly lead into the resumption of business at the new location.
  2. The distance of the move must meet the IRS’s distance test.
  3. The time frame in which the move occurs must pass the IRS time test.

It doesn’t matter whether the job is your first or whether you’re self-employed or an employee. The overall moving expense is declared on your 1040 form, without itemization, Schedule A or income-based restrictions. However, IRS Form 3903 – the Moving Expenses worksheet – is required. Form 3903 is where costs are detailed, possibly including loan fees on payday loans with no credit check if they apply toward the business-related move.

Getting there with Form 3903

If the move occurs entirely within the U.S., no special residency restrictions are required. However, if you’re moving outside the U.S. or a U.S. territory, you must be a U.S. citizen or resident alien in order to be eligible to deduct moving expenses on your 1040, says the IRS. If there are multiple business-related moves within the same tax year, a separate Form 3903 must be completed for each.

Pass the tests

The IRS requires tax filers to meet distance and time tests when it comes to moving expenses. See IRS Publication 521 for more details, particularly when it comes to special considerations for members of the military and whether loan fees from business-related no credit check payday loans apply for the tax deduction. The following rules apply to most circumstances.

Distance

A work-related move must take you at least 50 miles farther from your previous residence than your old place of work. If your old work was five miles away from your old home, the new location must be at least 55 miles away from the old home. If the job at the new location is your first, the job must be at least 50 miles away from your previous home. The IRS requests tax filers to calculate distances using the shortest common route available.

Time

For the first 12 months after your move is complete, you must work full time at your new place of employment for a minimum of 39 weeks. Self-employed tax filers must work a total of at least 78 weeks during the first 24 months, post-move. If you do not meet the time test before your return is due, filers can amend the return with Form 1040X. See Publication 521.

Sources

Bankrate.com – “Let Uncle Sam help pay for your move”

IRS.gov Form 3903 – Moving Expenses

IRS.gov Publication 521 – Moving Expenses

Only job-related moves apply

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