Tax Breaks for Moving

Everyone that already moved or plans to move this year because of a new job or relocation needs know what tax breaks they can claim. The tax savings can easily exceed a few thousand dollars with most family moves costing $5,000 to $10,000.

Do I qualify?

The new job location must be at least 50 miles further away than the distance of your prior home to the location of your old job. This means that if your commute was 20 miles, your new job location must be at least 70 miles from your previous home.

Also, you must work full time for at least 39 weeks at your new job location for the first year or at least 78 weeks during the first two years if you are self-employed. BUT, you can still deduct if you expect to meet this requirement in future years.

What types of moving expenses can I deduct?

The tax laws can get complicated but a good rule of thumb is that any ordinary and necessary expense that is related to the transportation will likely be considered a deductible moving expense. Now for the details. You can deduct lodging expenses, transportation expenses (airfare, vehicle mileage $0.19 per mile, parking fees and tolls). Note that you can only deduct one trip per person. As for the actual household goods and personal property, you can deduct the cost to package, crate, store, insure and transport those items. Also, those high connection and disconnecting fees that cable and electric companies are notorious for are also deductible. When it is all said and done, your expenses could easily exceed several thousand dollars.

You can't deduct purchases for your new home

Unfortunately, you cannot deduct items such as furniture purchases for your new home. In addition, any costs related to selling your previous home are also not deductible. Breaking a lease is also not covered and neither is the fee for updating your driver's license.

What if my employer reimburses me for my moving expenses?

If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return if it is not for an expense that is considered deductible. If it is for a deductible expense, then it isn't considered income but it also isn't deductible because your employer is essentially paying for it.

Ryan S. Himmel is the President and CEO of BIDaWIZ - the online marketplace for professional tax and financial advice for small businesses and individuals.

Visit us at BIDaWIZ to get answers to your tax deduction questions from licensed tax professionals