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Moving Expenses Tax Deduction

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Type of Deduction:

Above-the-line tax deduction (you don't need to itemize).

Basics:

If you moved to start a new job, or to seek work in a new city, you may be able to deduct the cost of your moving expenses from your income. Qualifying expenses include costs for packing and shipping your household goods and personal property, and costs for travel and lodging. Meals are not deductible as a moving expense.

Limits:

You can deduct the cost of moving expenses that exceed any reimbursements from your employer. You must meet the qualifications in order to claim this tax deduction.

Qualifications:

Your move must be because you started a new job. You must meet the distance and time tests. However if you are relocating to the United States from another country as a retiree, you can deduct your moving costs without needing to start a new job in the USA. In other words, retirees from abroad do not need to meet the time test.

Distance Test:

Your new job is located at least 50 miles farther from your old home than the distance between your old home and your old job. For example, let's say you commuted 25 miles from your old house to your old job. Now, you found a new job 75 miles away from your old house. Your commute to your new job is at least 50 miles further than your old commute (75 miles as compared to 25 miles). If you move, you can deduct your moving expenses.

Time Test:

You must work full-time for at least 39 weeks during the 12 months following your move. If you are self-employed, you must work at least 78 weeks in the 24 months after you move.

Where to Claim Deduction:

Moving expenses are reported on IRS Form 3903 (PDF), with the total expenses also reported on Form 1040.

From the IRS:

"If you meet the requirements, you can deduct the reasonable expenses of moving your household goods and personal effects to your new home. You can also deduct the expenses of traveling to your new home, including your lodging expenses. You cannot, however, deduct meals." (from IRS Tax Topic 455) Retirees relocating to the US after working abroad should refer to the IRS article, Moving Expenses to and from the United States.

Tax Law:

The moving expense deduction is found in Internal Revenue Code Section 217 and in the related Treasury Regulations section 1.217-2.

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