Tax Deductible Moving Expenses

Do you Qualify for Tax Exemption?

If you moved sometime during 2016, we have some good news for you! You may qualify for a tax reduction if you work as an employee or are self-employed in your new location. Not all relocation-related expenses will qualify, so before you start filling out your tax return, be sure to check out the following tips below to see if and how you may qualify to deduct certain moving expenses.

Your relocation must pass three tests:

  1. The Time Test: you must work as a full-time employee in your new area for at least 39 weeks (for one or more employers) during the first 12 months after your move. If you are self-employed, you must also work a total of at least 78 weeks during the first 24 months after arrival.
  2. The Distance Test: the distance between your old home and your new workplace must be at least 50 miles further than the distance from your old home to your old work place.
  3. Move Related to Start of Work – your move must closely relate both in time and in place to the start of work at your new location. You can consider moving expenses incurred within one year from the date you first reported to work at the new location as closely related in time to the start of work. A move generally relates closely in place if the distance from your new home to the new job location isn’t more than the distance from your former home to the new job location. For exceptions to these requirements, see Publication 521, Moving Expenses.

If you pass these three tests – congratulations! You can now begin looking at which types of expenses may qualify:

  1. Travel: If you drive to your new location in a personal vehicle, you can include the cost of oil, gasoline, parking fees and highway tolls, or by using the standard mileage rate of 19 cents per mile. For long-distance moves, you may deduct the cost of airline and train tickets.
  2. Storage: You may include the cost of renting a storage unit for up to 30 days if you are unable to immediately move into your new home.
  3. Relocation Services: You can deduct the cost of packing, crating, and transporting your household goods and personal effects from your former home to your new home.
  4. International Moves: To deduct expenses for a move outside of the United States, there are specific rules that apply which can be found in IRS Publication 54.

For a more detailed account of which expenses may or may not be deductible, the IRS Publication 521 explains how deductions work. Always be sure to keep copies of bills, receipts, credit card statements, and mileage logs on record related to your relocation for accuracy. The IRS provides more information on their website as to how to go about deducting these expenses from your tax return. Since we cannot legally offer tax advice, be sure to always consult your accountant for the most current information about your particular situation. 

Ready to move?

For help with your big move you should be sure to give Liberty Moving and Storage a call at 1-800-640-4487. With over 75 years of experience, our knowledgeable staff will be able to make sure you actually enjoy the moving experience. To learn more about what we can do for you, visit our website here.